[Rek jou cheque] Fraud, murder and lelike leuens: How skelms are targeting insurance industry
If you have a wild imagination and watch too many movies, you might find yourself submitting fraudulent insurance claims, and even committing murder to get “paid out”.
However, it really isn’t that easy.
Insurers are hard at work to catch those laying false claims, especially those involving “murder for money”.
Jean van Niekerk, convenor of the Association for Savings and Investment South Africa (Asisa) notes that, “Every death is one too many, and life companies are constantly updating their processes to ensure that risk policies are taken out only by honest policyholders to provide for their families.”
Unfortunately, someone with criminal intent will always find a way of cheating the system and hope to get away with it.
Sadly, their modus operandi often involves family members or vulnerable or desperate members of society.
Asisa’s Forensic Standing Committee has released its latest set of comprehensive fraud statistics for the industry.
These statistics cover fraud reported by investment companies in addition to the fraudulent and dishonest claims statistics reported by life insurers.
The statistics show that South African life insurers and investment companies detected 13 074 cases of fraud and dishonesty in 2023, a whopping 46% increase from the previous year when 8 931 cases were detected.
“The industry lost at least R175.9 million to fraud and dishonesty in 2023, a 128% increase from the R77.2 million lost in 2022. Early detection of fraud and dishonesty prevented losses worth R1.5 billion in 2023 compared to R1.1 billion in 2022,” Asisa says.
Increase
Van Niekerk attributes the steep increase in fraud detected in 2023 to a combination of the following:
Ongoing innovation of detection methods by forensic departments;
increasingly desperate consumers are willing to commit a crime for extra money;
and criminal syndicates who see life insurers and investment companies as lucrative soft targets.
Van Niekerk says it is vital for the savings and investment industry to ensure that fraud remains in check, to prevent fraud-related losses from spiralling out of control and higher claims rates from driving up premiums for honest policyholders.
“Seen in isolation, the fraud statistics paint a bleak picture. However, they should be considered as part of the bigger industry picture, which shows that the majority of policyholders and beneficiaries are honest.
“This is evidenced by the 95.9% payout rate in 2023 to the beneficiaries of 892 817 life and funeral cover policies to a value of R39.9 billion.”
Van Niekerk says many life insurers and investment companies have dedicated forensic departments focused on clamping down on fraud and dishonesty by identifying criminal trends as they emerge.
“A loss of R175.9 million to fraud and dishonesty is significant, and our industry is focused on clamping down on criminal activity through continuous evolution and adaptation.”
The Asisa fraud statistics are divided into five categories:
Remuneration fraud: Fraudulent attempts by call centre agents, tied agents, or independent financial advisers (IFAs) to benefit from commission and/or fees;
Fraudulent applications: Fraud and dishonesty committed at the application stage through misrepresentation, non-disclosure, impersonation, or identity theft;
Fraudulent and dishonest life insurance claims: Fraudulent or dishonest attempts to claim benefits from risk policies such as life and disability cover;
Fraudulent withdrawals and disinvestments: Accessing investments by fraudulent means from linked investment service providers (Lisps), collective investment schemes (CIS), and retirement funds; and
Other fraud: Examples include fraudulent attempts to obtain investment policy benefits and bribery and corruption.
More than half of all fraud cases recorded by Asisa members in 2023 were classified as
remuneration fraud, showing a steep upward trend from 2022.
Fraudulent and dishonest life insurance claims were the second-highest contributors to fraud cases in 2023. Unfortunately, losses jumped from R17 million in 2022 to R69.8 million in 2023 driven largely by fraudulent death claims.
Van Niekerk reports a decrease in fraudulent withdrawals and investments, but a concerning
increase in actual losses recorded, which jumped from R23.7 million in 2022 to R40.5 million in 2023.
“While the attack rate was lower, the value of prevented and actual fraud increased substantially in 2023,” he comments.
New and concerning trends
Van Niekerk says two concerning trends that have emerged in recent years are murder for insurance payouts and deceased estate fraud.
Deceased estate fraud
Life insurers and investment companies noticed new trends whereby criminals target deceased estate benefits and investment accounts. In 2023, life insurers reported 20 cases and investment companies 34 cases.
He says deceased estate fraud is committed by impersonating legitimate parties and fabricating letters of executorship and other documents, as well as opening fraudulent bank accounts in the names of beneficiaries by impersonators and false executors.
Fraudulent and dishonest claims across the provinces
The highest number of fraudulent and dishonest claims were reported in KwaZulu-Natal (KZN), followed by Gauteng, the Western Cape, and the Eastern Cape.
The Western Cape, in particular, saw the biggest increase in fraudulent activity compared to previous years.
Those who commit insurance fraud, don’t only make it harder on themselves (if they are caught, they could face jail time) they make it harder on everyone else.
Fraudulent claims mean higher premiums, and many people certainly cannot afford that right now.
This is not the movies. This is real life.
Chances are that you will get caught and suffer the consequences of your dishonesty.
dailyvoice@inl.co.za