The latest figures show a fivefold increase in the number of South Africans trying to scam funeral insurers

Business Insider SA

  • There was more than R1 billion in attempted scams against life insurance companies in 2016, an industry organisation reported on Monday.
  • Cases of fraud and misrepresentation jumped 228% – even though the value of detected scams increased by only 19%.
  • Syndicates and brokers played a much smaller role in attempted fraud than in 2015, but many more ordinary people tried their luck.

At least 13,371 people tried to defraud life insurance companies in 2016 or secure payouts through some sort of serious misrepresentation, the Association for Savings and Investments SA (Asisa) said in a statistical release on Monday.

In total those people tried to scam a little over R1 billion from the industry.

More than half the fake claims were on disability policies, and around a quarter on life policies. Much of the rest was in the form of funeral claims, a fast-growing source of fraud.

See also: In 2017 medical aids lost at least R300 million to fraud. Medical professionals who overcharged paid 0.05% of that in fines – and kept working

The number of fake claims, or claims with misrepresentation increased from 4,381 in 2015 to 13,488 in 2016, making for a jump of some 228%. But the total attempted claims was up only a little under 19% compared to the the R871 million in 2015.

That was mostly due to more than 14-fold increase in funeral claims where there was misrepresentation or a serious lack of disclosure, Asisa says. In 2015 it detected fewer than 800 such cases. In 2016 there were nearly 11,000.

Funeral policies are typically worth far less than life insurance policies, so that the huge increase in attempts made little impact on the overall rand value of cases.

See also: These are some of South Africa's most brazen medical aid scams and schemes

By contrast to funeral policies, attempts to wrongly claim for death was barely up barely 4%, from 426 cases in 2015 to 444 in 2016.

Asisa reports on the number of cases where it detected the involvement of syndicates and brokers or financial advisors – and that number was down sharply. 

In 2015 there were 310 such cases, or 7% of total fake claims. 

In 2016 syndicates and brokers were found involved in only 117 cases, or 0.9% of the total.

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