Another 156 fraudulent claims showed syndicate involvement – and in seven cases beneficiaries were found to have caused the death of the policyholder.

Funeral policies don’t require blood tests and medical examinations and are designed to pay out quickly when an insured family member dies.

“Unfortunately, this makes it tempting for criminals and dishonest individuals to take out funeral cover for people who do not exist with the intention of later submitting claims using death certificates issued for dead bodies rented or bought for the purpose of committing fraud,” Donovan Herman, convenor of the ASISA Claims Standing Committee, say.

If we allow fraudulent and dishonest claims, honest policyholders will ultimately end up footing the bill through higher premiums driven by untenable claims rates.”

Overall, 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 space.

The 2018 fraudulent and dishonest claims statistics, released this week by ASISA, show that the total number of irregular claims was lower in 2018 than in 2017, but the claims value remained almost the same.

In 2017, life insurers detected 5,026 fraudulent and dishonest claims worth R1.13 billion.

Herman says life insurers owe it to honest policyholders to protect the integrity of the long-term insurance model by preventing fraud and dishonesty.

He added that while life insurers are frequently accused by the public of trying to avoid paying claims, the numbers tell a different story.

In 2018, life insurers paid 99.3% of claims made against fully underwritten individual life policies alone, to a value of R15.1 billion.

Zambia Reports