Fraudulent claims on rise

While many South Africans would never think of submitting a fraudulent insurance claim, insurers have experienced a dramatic rise in the submission of false information for financial gain.

Car insurance fraud is currently ranked among the top 10 crimes in South Africa.

Often taken lightly, the consequences are, however, incredibly serious.

According to the crime statistics for 2018/19 released by the South Africa Police Service and Stats SA earlier this month, commercial crime has seen the biggest increase of 14.4% compared to last year.

As car insurance fraud is considered a white-collar crime, it falls into the commercial crime category – the same category as corruption, extortion, money laundering, embezzlement, internet fraud, forgery and tax evasion.

Vera Nagtegaal, the executive head of online comparison site Hippo.co.za, says financial circumstances can lead people to be tempted to embellish claims for their benefit.

“The insurance industry is receiving a lot more inflated or false claims for high value payouts when a vehicle was actually worth less, as well as incidents where accidents are staged.”

Nagtegaal says up to 32% of all insurance claims submitted in any year could be fraudulent.

“The consequences for those found guilty of car insurance fraud is that their claims will be repudiated, they will become uninsurable, and they face the risk of prosecution,” she says.

Earlier this year, a man who claimed that his car was hijacked was handed a seven-year sentence after an investigation found that his claim in October 2016 had been false.

He managed to defraud his insurer of R300 000.