Insurance fraud was born shortly after the concept of insurance was discovered, and it costs honest consumers billions of Rands every year because insurance providers have to increase the cost of premiums in order to take into account the substantial rate of fraud that is bound to occur thanks to those bad apples who think they're smarter than everyone else. It is estimated by the venerable drudges at Standard Bank that the rate of short-term insurance fraud in South Africa today is a massive 15% of premium costs, or to put it in blunt numbers, R3 billion every year is siphoned off by these criminals. Long-term insurance fraud is also alive and well, so to speak, and last year egregiously fraudulent claims totted up to over R100 million, and those were only the claims that were discovered.

The frightening point is that we have no idea how much money is really lost to insurance fraud because the crime is designed to escape detection, so when we say that R100 million worth of fake life insurance claims were filed that does not take into account all those insurance scams that were successfully perpetrated and therefore not discovered.

In the United States it is estimated that $80 billion was lost to insurance fraud last year alone, which is frustrating because that money could have been poured into a failing bank instead.

So what is insurance fraud? Well, there is hard fraud and soft fraud - the former being more severe and premeditated while the latter is the white-lie equivalent of insurance fraud. In hard insurance fraud a loss of property or valuables is planned or spun out of thin air in the hope that the insurer will pay out the value of the policy. As a result buildings are deliberately burned to the ground, spouses go on permanent visits to the bottom of the ocean floor, and accidents are oxymoronically planned in advance. In instances of soft fraud consumers claim an exaggerated amount following a loss. Let's say your car is stolen. Would it be so terrible to say that your new set of golf clubs were also in the boot? That way you could end up with two sets of new golf clubs, which would come in handy if you enjoy best ball. It's certainly less terrible than faking your own death in order for your family to cash in your long-term insurance policy (I'm not naming names, but if I was I'd say John Darwin and let Wikipedia fill in the blanks), but it is still insurance fraud.

Some cases of insurance fraud look like a victimless crime but that simply isn't true. While all consumers dutifully pay their premiums every year some of them want to make it worth their while when they finally get an opportunity to make a claim. So they decide to fix all the dings and scratches on the car and not only the bumper that was actually damaged when they're in an accident, and figure that they're entitled to this compensation from the mean, faceless insurance corporation. But just as society would be reduced to meaningless chaos if everyone decided that it was okay to lie all the time and never tell the truth, so too is the concept of insurance drastically weakened when people decide to cheat the system. In fact, the system is only as strong as the fundamental honesty or truth-telling of the majority of participants, so when insurance fraud is committed by some we all end up paying more.

It is estimated that anywhere from 25% to 33% of all automobile insurance claims have an element of fraud to them. These scams range from claims for personal injuries that were not in fact sustained during the accident, to exaggerating the damages to car and or person after the fact. At the other end of the spectrum in terms of severity, insurance fraud can often be the motive for murder, and there are numerous examples of awful crimes that can be traced back to juicy life insurance or property insurance policies. But let's leave that for pulp fiction detective novels and try to prevent insurance fraud in our everyday lives, since the only ones hurt in the long run are the honest members of society.