Cape Town — Insurance fraud cost the South African life insurance industry R214m in the first nine months of last year, according to statistics released for the first time by the Life Offices Association .

The statistics, collected from all major insurance companies, reveal that between January and September 2003 there were 447 cases of fraud, with a claims to the value of R72,6m.

A further 1963 cases involving non-disclosure of relevant information and misrepresentation, with a claims value of R134,6m, were uncovered. These related mainly to HIV, where blood samples from people who were HIV-negative were passed off as samples of HIV-positive people in order to obtain insurance cover.

The figures showed that fraud was a major threat to the industry and, for the first time, gave the industry a benchmark from which to tackle the problem, said Gerhard Joubert, executive director of the association.

He told a forensic, fraud and finance seminar on Friday that the statistics would also assist insurance companies in shaping intervention strategies and alerting them to patterns of fraud.

Joubert said the highest incidence of fraud was in KwaZulu-Natal, with Gauteng next, where topend and higher policy value fraud occurred.

He said fraud syndicates, involving insurance brokers and certain doctors, had been uncovered by the industry. "We have found cases where doctors and intermediaries work together and draw blood from HIV-negative people to be submitted into the chain on behalf of an HIV-positive people so that they can benefit and get life cover."

The brokers and doctors were disbarred and placed on a database of offenders . The names were also submitted to the Financial Services Board .

Joubert said the association was considering a proposal for an incentive scheme, which tied in with the industry's HIV testing protocol, to reward financially employees of pathology testing laboratories who provided the association with evidence of fraud .

Desmond Bole, of the Scorpions crime-fighting unit, told the seminar that the home affairs department received more than 5000 applications in the past three years for the re-registration of people on the population register whose identities had been "stolen".

He estimated that in KwaZuluNatal about 75% of stolen identities resulted in "obviously fraudulent" insurance claims. Bole's investigations revealed that the industry was being targeted by syndicates .

Methods used to defraud insurance companies included policy owners reporting false deaths ; policy owners falsely identifying bodies at government mortuaries to claim accidental death benefits; and syndicates obtaining the identity documents of people .