Johannesburg - Death is very big business in South Africa but it also has a darker side.
The past few years have revealed a particularly disturbing trend in the country’s “death sector'', with exploitation and fraud increasingly rife.
In many African societies, death is seen as an especially poignant rite of passage laden with tradition and ritual, where the deceased’s spirit is prepared to pass on to the next realm.
The degree of pomp and ceremony that go with a loved one’s passing is seen as a sign of respect for the deceased and families that host funerals, which do not live up to their community’s expectations, often fear losing their social status.
Client Engagement team lead at Metropolitan GetUp, Liezel Gordon said given the high costs often associated with burial, funeral policies are the most popular category in the country’s insurance sector.
Metropolitan, like many other funeral cover providers, have placed a cap of R80 000 on a funeral policy but very often the total cost of some funerals far exceed that. There are also measures in place to limit funeral policies to one per person but syndicates have found ways around these.
“The Financial Sector Conduct Authority (FCSA) found that of the 60% of South Africans reported as having at least one insurance product, the vast majority of this group (41%) comprised those with a funeral policy – bearing in mind that this figure doesn’t account for the informal sector,” she said.
Gordon said given its scale, it should come as no surprise that the sector is ripe for exploitation by unscrupulous players. The Association for Savings and Investment South Africa (ASISA), reported that in 2020, 2 282 funeral insurance claims were fraudulent or dishonest, accounting for more than 80% of the total number of fraudulent claims in the risk category for that year.
“Economic upheaval catalysed by the pandemic certainly ramped up society’s collective desperation, which often increases unethical behaviour and crime.There’s been a renewed emergence of syndicates that are well-versed in insurers’ policies and processes. These syndicates take out funeral insurance on behalf of already deceased people or, tragically, may even resort to taking the lives of those they insured,” warned Gordon.
Convicted murderer, Rosemary Ndlovu, a former police officer, is currently serving six life sentences for a string of murders she orchestrated, in order to claim insurance payouts.
“Syndicates, particularly in the Eastern Cape, look for every opportunity to exploit and there has been an upward trend with unnatural deaths in the last few years,” noted ASISA.
There have also been a number of cases where syndicates purchased corpses from mortuaries, using the body to claim against policies fraudulently taken out. Fraudsters phish personal information from their victims and use that data to take out a policy or to include on a fake death certificate.
Deputy president of the The National Funeral Directors Association (NFDA), Dr Lawrence Konyana said they too have noticed an upsurge in funeral policy scams.
“Many people are signing up friends and family. Most people are doing it for self-gain though. We have legislation that can control this and there are systems in place across the insurance industry to stop this from happening,” said Konyana.
On the aspect of elaborate funerals, Konyana said these have become like weddings.
“People have different preferences but the key point is that as long as you can afford it, it’s OK. The problem comes when you have to put yourself in debt to put on a display,” he said.
Gordon added that in some parts of the word, families hire Harley Davidson hearses for funerals which can run into the hundreds of thousands.
So how can consumers protect themselves? When it comes to suspected fraud, Gordon advises contacting your insurer immediately if you suspect fraud or find that a policy has been taken out in your name, to ensure that any attempt at fraud is stopped in its tracks.
“Interrogate your bank statement and be on the lookout for transactions or debits you did not authorise. All fraudulent activity – whether suspected or confirmed – should always be reported to your bank, the insurer in question, and the authorities,” she added.
Gordon also warned that on the other side of the cemetery, there are a rising number of insurers and intermediaries that are far from innocent bystanders in the funeral feeding frenzy. Insurance sales agents, eager to earn commission, may be tempted to ‘over-sell’ bells-and-whistle benefits or advise clients to take out multiple policies with little difference between products.
“This is generally not in the clients’ best interests. Clients are often unable to afford these expensive practices monthly and, in the end, their policies may lapse. If tragedy strikes and the policy has lapsed, the client has nothing to show for it,” she said.