26 July 2010

Fake Insurance Claims Climb Higher in South Africa

More and more fake insurance claims are being made
More and more fake insurance claims are being made
This trend has been blamed on the recession.

The number of cases involving fake insurance claims in South Africa jumped significantly last year, with stories of brazen acts of fraud doing the rounds among insurance groups.

Tales of stealing bodies from funeral parlours in order to claim death benefits, and even consumers shooting off their own thumbs in order to claim disability, are just some of the cases cited by the deputy Chief Executive Officer of the Association for Savings and Investment in South Africa, Peter Dempsey.

The CEO said that the recession could be blamed for the rise in the number of fake insurance claims.

Good news, however, is that the involvement of syndicates in this type of crime has actually dropped somewhat compared to several years ago.

"We find that if you go back probably six to seven years, there has been a reduction in syndicate involvement," noted Dempsey.

He said that around 5 - 6% of the cases involved syndicates.

All in all, life insurance companies managed to foil fraudulent claims worth more than R740 million in around 4514 cases.

A year before, in 2008, the industry said that it had foiled 1382 illegal claims that would have been worth R375.9 million if they had been paid out.

Paying out on fraudulent claims eventually means that innocent policyholders eventually have to foot the bill through an increase in premiums.

"But it shows that people are driven to desperation by the economic situation and the extent to which they can go to make fraudulent claims," said Dempsey.

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Story Highlights »
  • Syndicate involvement in insurance crime has dropped.
  • Over 4,500 cases were foiled in 2009.

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