Hit and run, body theft crimes topped the list for fraudulent insurance claims in SA last year
- More than 2,200 bogus claims came from the funeral industry last year.
- With increased death due to Covid-19, scamming life insurance companies became easier and more prevalent.
- Syndicates are going as far as targeting drug and alcohol addicts and obtaining their details to apply for funeral policies on their behalf, with plans to murder them.
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Fraudulent or dishonest insurance claims, such as “selling dead bodies” and “orchestrating unnatural deaths” increased 12% in 2020, the Association for Savings and Investment South Africa (ASISA) said on Monday.
Most of the fraudulent cases emerged from the funeral industry, which saw a significant rise in deaths due to the Covid-19 pandemic that has claimed the lives of almost 80,000 people in South Africa.
The industry had 2,282 cases worth R80.8 million – up from R64.2 million – found to be fraudulent or dishonest last year.
Last year, one common fraudulent insurance claim was the ‘hit and run’ crime, where people attempted to access funeral policy payouts illegally.
In some instances, families orchestrated unnatural deaths to evade the six to 12-month waiting periods on natural deaths. Waiting periods in the funeral industry on natural deaths are imposed and prevent people from only taking out a policy once they fall sick and are more susceptible to death.
“One family collected the body from the mortuary before the death was registered. The body was then purposefully placed in the road where it could be hit by a car. The family reported a hit and run accident and submitted a claim,” ASISA said.
Some cases also involved mortuary workers selling dead, unclaimed bodies to syndicates that use the bodies to claim for funeral policy payouts.
Although funeral insurance has always been a soft target for fraudsters, the Covid-19 pandemic made it worse, said Megan Govender, convenor of the ASISA Forensics Standing Committee.
“Since funeral insurance policies do not require blood tests and medical examinations and are designed to pay out quickly and without hassle when an insured family member dies, criminals and dishonest individuals most commonly try their luck in this space.”
Desperation due to job losses was also a significant driver leading to the spike in these fraudulent claims.
The significant increases in deaths also make it easier to source dead bodies from flooded mortuaries, Govender said.
During the second wave of the pandemic in December, funeral directors bore the brunt of a massive increase in Covid-19 deaths, with many running out of cold storage space and resorting to storing bodies on mortuary floors.
Govender added that the increase in the claims was not surprising, given the country’s dire economic conditions, which are likely to tempt policyholders to be dishonest and push syndicates to try their luck in the hope of scoring sizeable insurance payouts.
Some new syndicates even target drug and alcohol addicts from poor communities, promising them jobs. The syndicate obtains their personal details, including their banking details to take out funeral policies.
In one case, the syndicate attempted to murder the victim, but the victim managed to escape, said Govender.
The syndicate’s plan B involved buying a dead body and submitting a claim which was marked to be suspicious and submitted to forensics for further investigation. It was found that the insured person was still alive.
Although there was a rise in bogus life insurance claims, the industry reported 434,216 legitimate death claims during 2020, with 266,321 being funeral policies. Overall claims and benefits paid to policyholders and beneficiaries by South African life insurers reached R522 billion during the period.
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