Drop in insur ance fraud
Report shows fewer dishonest claims
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.
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.