Life Insurance Fraud On The Rise

Life insurance fraud is on the rise, and insurance companies are being forced to be even more vigilant. 

According to the Association for Savings and Investment in South Africa (ASISA), there has been a massive spike in fraudulent death claims in South Africa, with experts saying fraud costs the combined insurance industry billions of rands a year. The statistics show that in 2017, claims to the value of R1.13 billion were made against life insurers. In total, 2 111 death claims were reported in 2017, compared to only 444 in the previous year.

One example of this kind of fraudulent claim is from an investigation by the Insurance Crime Bureau in 2018, where a child of 13 years apparently died under strange circumstances. An official death certificate was issued, and an undertaker confirmed she had been buried. 

However, she was later discovered to be alive, and an investigation uncovered that she was part of an insurance fraud scheme to receive multiple pay-outs from different insurance companies where the child was covered under various policies. The SAPS are investigating to try and determine which child was in fact buried.

“Insurance companies have rules and procedures in place to protect themselves from these kinds of fraudulent claims, but as long as their clients have acted honestly and in good faith, they have a responsibility to deliver on their promise,” says Vera Nagtegaal, the executive head of Hippo.co.za.

She says that the rule of thumb when you take out a life insurance policy is to overshare. “If there is any information that relates to your health or lifestyle, disclose it, even if you think it isn’t relevant. This may mean that your premiums are increased, but it will help to ensure that you or your family are better protected against your claim being repudiated as a result of non-disclosure.”