South African life insurers detected 3,708 fraudulent and dishonest claims to the value of R1.06-billion in 2018, and most of the fraudulent activity in 2018 took place in the funeral insurance sector.
South Africans are reportedly renting and buying dead bodies to falsely claim from their life insurers. This revelation is contained in a report by the Association for Savings and Investment South Africa (Asisa).
In 2018, life insurers rejected 1,915 funeral claims totalling R176.4-million, of which 1,127 were found to involve fraudulent documentation. Another 156 fraudulent claims showed syndicates were involved, and in seven cases, beneficiaries were found to have caused the death of the policyholder.
"If fraudulent or dishonest claims are not detected and stopped, initially it is the life company that suffers. If fraud and dishonesty are left unchecked and push claims rates up to untenable levels, life companies will eventually be forced to increase premiums and then it impacts on honest policyholders," Asisa told Daily Maverick.
The convener of the Asisa Claims Standing Committee, Donovan Herman, reckons life insurers owe it to honest policyholders to protect the integrity of the long-term insurance model by preventing fraud and dishonesty:
"If we allow fraudulent and dishonest claims, honest...