HOW TO AVOID FU­NERAL SCAMS

Fraud­sters will do any­thing to get your money, so be sure you are pro­tected, writes An­gelique Ruzicka

CityPress - - Front Page -

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.”

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