18 May 2009

Insurance Fraud Up

Fraudulent claims are on the rise in SA
Fraudulent claims are on the rise in SA
Insurance fraud is up by as much as 12% in the last 6 months

With the South African economy is a bad way, and many of the country's citizens trying to make ends meet, it is only to be expected that a certain percentage of short term insurance policyholders would try and get a free meal ticket by making fraudulent claims.

The short term insurance industry in South Africa recently reported a significant rise in the rate of insurance fraud, with some companies reporting an increase of as much as 12% in the last six months.

As the recession deepens in South Africa, short term insurance companies say that insurance fraud could cost them billions of Rands, and that the customer will undoubtedly pay the ultimate price as firms will be forced to push their premiums up to cover their losses.

The Operations Head of the South African Insurance Crime Bureau, Hugo van Zyl said: "Some companies' insurance fraud figures rose by between 10% and 12% in the past six months."

The stakeholder relationship manager for the South African Insurance Association, Vivienne Pearson also said put the damage to the insurance industry into numbers. "About 10% of short term insurance claims contain an element of fraud, which amounts to nearly $2 billion a year," she said.

Insurance crime takes place in different formats, say the experts. In some cases, they are claims on cell phones and laptop computers, while it is not unheard of for international crime syndicates to undertake fraud on a much greater scale.

But one reader on The Times talkback didn't seem too perturbed by the rise in insurance fraud figures. "The insurance companies have been stealing from the people for decades and continue to do so," he wrote. "No sympathy for them in any way, shape or form. Pay back as I see it... only on a much smaller scale than the insurance companies."

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Story Highlights »
  • Insurance fraud is up between 10% and 12%
  • Insurance fraud ends up hurting policy holders as premiums rise

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