Identity theft the main cause of life insurance fraud
Syndicates get death certificates for unclaimed bodies and cash out life insurance policies taken in their names.
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Insurance fraud in South Africa reached an all-time high, according to
authorities dealing in crime prevention in the country. The head of South
African fraud prevention services said that false claims and applications cost
insurance members R1.1 billion - with most of these losses resulting from
identity theft.
The increase in HIV/AIDS in South Africa means that, unfortunately, it has
become easy enough for fraudsters to steal anyone's identity, take out an
insurance policy in that person's name, claim that the person has died and then
take the money.
One of the most disturbing crimes in recent times has been the formation of
syndicates that deal with dead bodies. These syndicates have informants in most
of the country's mortuaries, who advice the syndicate members when a body has
been unclaimed or cannot be identified.
Speaking for the Forensic Standing Committee of the Association for Savings
and Investment South Africa, Ernst Pienaar said: "They will also disfigure and
sell an unidentified body between syndicates to commit multiple fraud. It's
quite morbid.
The next step is for the insurance fraud criminals to obtain death
certificates from the Department of Home Affairs on the basis of these
unidentified bodies, and then cash out the life insurance policies. In many
cases, fraudsters can make as much as R16,000 on these insurance policies.
Unfortunately, identity fraud is on the rise in South Africa, and not only
affects the insurance industry. "I am sitting here with an identity document
with the same photograph and four different identity numbers," said the head of
the fraud prevention services, woefully.
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