HOW TO AVOID FUNERAL SCAMS
Fraudsters will do anything to get your money, so be sure you are protected, writes Angelique Ruzicka
Last month, the Financial Services Board (FSB) warned the public not to deal with 13 funeral insurance providers who are under investigation – Matome Molefe Funeral Service, Eyodidi Funeral Undertakers, Baxolise Funerals, Zelda’s Wreaths and Coffins, City Funerals, Devine Casia, Ndikhokhele Yehova Funeral Service, Infinitum Funeral Assist, Tswelopele Funerals, Itshereletso Funerals, Nom and Macc Funeral Services, Botlhe Funeral Undertakers and M&P Funeral Services.
Jacky Huma, head of micro insurance at the FSB, says: “Some of them have started engaging us with a view to regularise their business activities, and they are in the process of acquiring an underwriter. Investigations are ongoing and regulatory action will be taken against those who are not cooperating with this office.”
Huma adds that there are 135 cases open for investigation of possible unregistered insurance business by funeral parlours and other entities offering funeral insurance. Worryingly, it’s unclear at this stage how many funeral policies have been issued by these entities.
Craig Baker, the CEO of MiWayLife, says this is a typical scam.
“A common case of fraud in terms of funeral cover is where people take out ‘funeral policies’ from scammers who are not providing any actual cover. Fraudsters target the public with the promise of funeral cover, normally via a face-to-face interaction.
“Premiums are collected in cash. Unsuspecting ‘policyholders’ then believe they’re covered, but there is no insurance company underwriting the risk and premiums collected are not paid over to a registered insurance provider,” says Baker.
“The scammers take advantage of the lack of knowledge of the financial services industry and, by the time the fraud is uncovered, it is often too late and the money that was paid over is unrecoverable.”
Industry insiders say that there are many ways for con artists to penetrate the system and take advantage of unsuspecting consumers.
Traditionally, funeral cover is seen as an essential product to take out because of the expense of funerals, which can cost R50 000 to R100 000, according to direct funeral insurance provider MiWay.
It’s a captive market and the product is simple. While this insurance can help families in terms of the potentially fast claim payment turnaround, it offers fraudsters many ways to abuse the system.
“Most insurance companies undertake in their insurance contract to pay a claim within 48 hours of receipt of the documents confirming the death of the policyholder and, while this is a great benefit to genuine policyholders, it is used by syndicates and fraudsters as a way to get money out of the insurer before there’s time to do a full investigation into whether there’s a case of fraud or criminal activity,” says Baker. Fraudsters also often dupe the insurers themselves. Africa Unity Life CEO Sonja Visser says: “Quite a number of syndicates have been found to operate in this space. They operate with stolen ID documents and even draw in mortuary staff who supply information about unidentified corpses. They use ID documents to initiate policies on people who died years ago or on people who are not aware that they are insured.”