By: Kaya 959 News
South African life insurers reported a 12% increase in fraudulent and dishonest claims across all lines of risk business in 2020 when compared to 2019. The highest incidence of fraud and dishonesty last year took place in the funeral insurance space, where a total of 2,282 claims were found to be fraudulent or dishonest.
Policyholders and beneficiaries received claims and benefit payments worth R522.7-billion from South African life insurers in 2020. The life industry recorded 434,216 legitimate death claims in 2020, of which more than half were for funeral policies (266,321). Last year, 2,282 claims against funeral policies were found to be fraudulent or dishonest.
The Association for Savings and Investment South Africa says 31% of all fraudulent and dishonest claims were detected in KwaZulu-Natal, followed by the Eastern Cape with 16%, and Gauteng with 15%.
Convenor of the ASISA Forensics Standing Committee, Megan Govender, said the increase in fraudulent and dishonest claims is not surprising since tough economic conditions make it more tempting for dishonest policyholders and syndicates to try their luck in the hope of scoring sizeable insurance pay-outs. Govender said while funeral insurance has always been seen as a soft target for fraudsters, the pandemic has made it worse.
She said there have been several shocking incidents in recent months that illustrate just how far some people will go to access a funeral policy pay-out illegally.
Govender said she has come across cases where families were so desperate for pay-outs from funeral policies that they orchestrated unnatural deaths after their family members had died from natural causes within the waiting period.
“One family collected the body from the mortuary before the death was registered. The body was then purposefully placed in the road where it could be hit by a car. The family reported a hit and run accident and submitted a claim,” she said.
Govender said fraud in the funeral insurance space often involves mortuary employees who sell dead bodies to syndicates who then use these bodies to claim against policies that were fraudulently taken out some months earlier.
“If funeral cover is taken out on someone who does not exist by submitting fraudulent documentation, the criminal will have to commit a further crime by either buying a dead body or murdering someone to enable them to claim. Buying an unclaimed dead body is usually the easier option,” Govender said.
ASISA said in one case the syndicate then tried to murder the victim. The victim managed to escape, and the syndicate then moved to plan B of buying a dead body and submitting a claim.
He said the claim was marked suspicious by the life company’s claims department and submitted to the forensic department for further investigation. Investigators found that the person whose life was insured was in fact still alive.
Govender said the same syndicate has also been responsible for other fraud cases and suspicious deaths.
Govender warned those contemplating a dishonest or fraudulent claim that life insurers have put in place extremely sophisticated fraud detection mechanisms using artificial intelligence and data.
“The chances of being caught are extremely high and the consequence is likely to be a lengthy prison sentence,” Govender said.
Image courtesy of Pexels/ @Anna Tarazevich