Drop in in­sur ance fraud

Re­port shows fewer dis­hon­est claims

Weekend Witness - - Mone Y -

THE South African life in­surance in­dus­try re­ported a r educ­tion in the num­ber of fr aud­u­lent and dis­hon­est long­term in­surance claims unc overed in 201 3 c om­pared with 2012.

The value of the se claims, h ow­ever, in­creased sub­stan­tially fr om R66 9,9 mil­lion in 2012 t o R794,5 mil­lion in 201 3.

Statis­tics from the As­so­ci­a­tion for Sav­ings and In­vest­ment South Africa (Asisa) show that 4 690 fraud­u­lent and dis­hon­est death, fu­neral, dis­abil­ity, health and hos­pi­tal as well as re­trench­ment claims were det ected and pr evented in 201 3, c om­pared with 5 466 in 2012.

Peter Dempsey, deputy CEO of Asisa, said if left unchecked, fraud­u­lent and dis­hone st claims will over time sub­stan­tially in­crease the claims ex­pe­ri­ence of life com­pa­nies and force them to re­cover th­ese los ses fr om cus tomers thr ough incr eased pre­mi­ums.

He said, h ow­ever, that b y f ar the ma­jorit y of claims sub­mit­ted to life com­pa­nies are hon­est and le­git­i­mate, and ther efore hon­our ed.

“Life com­pa­nies paid 98,9% of all claims made against fully un­der­writ­ten life poli­cies in 2013. Only 1,1% of death ben­e­fit claims were de­clined,” he said.

The to­tal num­ber of ir­reg­u­lar death and fu­neral claims de­tected in 2013 was less than half the num­ber th warted in 2012. Hos­pi­tal cash plans w ere hit har d in 201 3.

For the first time, the num­ber of dis­hon­est and fraud­u­lent claims ag ainst al­mos t equalled those against death and fu­neral cover, which in the past al­ways at­tracted the high­est level of dis­hon­esty and crim­i­nal acti vity.

“Our mem­ber s det ected 2 019 dis­hone st and fraud­u­lent hospit al cash plan claims w orth R16,8 mil­lion, of which 1 052 were cases of fr aud by syn­di­cates to a v alue of R9,2 mil­lion. In 2012 there were onl y 1 4 case s in volv­ing s yn­di­cates.” The majority of dis­abil­ity claims were re­jected due to mis­rep­re­sen­ta­tion and ma­te­rial non­dis­clo­sure rather than fr aud. RE­TRENCH­MENT BEN­E­FIT CLAIMS In the past, the in­dus­try recorded very few dis­hon­est ben­e­fit claims. This changed in 2013 with 125 re­trench­ment ben­e­fit claims w orth jus t o ver R1 mil­lion r ejected t o due t o misr ep­re­sen­ta­tion and ma­te­rial non­dis­clo­sur e as w ell as fr aud. In 2012 ther e were six case s. — B usi­ness E ditor.

PHOTO: SUP­PLIED HOS­PI­TAL C ASH PLANS DIS­ABIL­ITY CLAIMS

If l eft uncheck ed, fr aud­u­lent and dis­hone st cl aims will o ver time sub stan­tially incr ease the claims e xperience o f lif e c om­pa­nies and f orce them t o r ecover the se l osses fr om cus tomers through incr eased pr emi­ums.

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