Committing insurance fraud can cost you jail time. Although there are a few people that do it deliberately, there are situations where it can be done unintentionally.
According to ASISA, South African life insurers detected 4 287 fraudulent and dishonest claims worth R787. 6 million in 2021 alone. A small white lie here, leaving out information, or in some extreme cases, renting a body to get an insurer to pay out a policy could result in people paying more than what they have bargained for. Here are four examples of insurance fraud you need to know about.
Non-disclosure
There are a few reasons as to why someone will leave out information. Deliberately leaving out information means that you have intentionally chosen not to share information about a medical condition, lying about your age or lifestyle activities.
There are also scenarios where people unintentionally leave out information due to a misunderstanding of a question that is being asked or having forgotten about a medical condition that they have suffered a while back. These could both affect your policy and the claim process.
It is vital to provide your insurer with the correct information to ensure that you are adequately covered. If it is something that happened to slip your mind during the application process but you happened to remember it after you have applied, tell your insurer immediately.
Claiming HIV with someone else’s blood
Disability cover is one of the ways in which you can protect yourself financially from temporary or full disability that will prevent you from being able to work. However, insurers have experienced situations where someone will fake their disability or use fake test results to get access to the payout of the policy.
For example, a disability claim was submitted by a nurse under her severe illness benefit, alleging that she had suffered a needle stick injury at work which resulted in her being exposed to and infected with HIV. She supported the claim with a test result that confirmed her status as HIV positive even though antiretrovirals had been administered immediately after the alleged exposure.
Taking cover on an already terminally ill person
Most insurers aim to make the process of taking out a life or funeral policy easy for families so that they can provide their loved ones with a financial safety net that will protect them. However, this process relies on the honesty of the applicant to see if an insurer will cover them or not. The only time where an insurer will check that all checks out is when they begin the claims process to assess the cause of death to avoid situations where someone places a fraudulent claim.
It's not uncommon for people to take out a policy for someone who is already terminally ill - who wouldn't get cover if this is disclosed. However, this could lead to a policy claim to be denied once the investigation process has been completed by an insurer.
Syndicate involvement
Criminal syndicates are aware of the amount of money that insurers use to protect South African's and their families. It also means that there are countless cases where these syndicates will use other people’s information and attempt to apply for a policy. This could also mean faking someone's death or having access to bodies they can rent to prove to an insurer that a person has died. While insurers have various process in place to make sure that policies are protected from such situations, it is crucial that you never share your personal information with someone who is not part of a registered financial service provider (FSP).
