Category Fraud/Crime

Fraud on the rise in the long-term insurance industry: Here’s how to protect your organisation

28 July 2022 EasyDebit
Junior Biola, CEO of EasyDebit

Junior Biola, CEO of EasyDebit

With the incidence of long-term insurance fraud soaring during the course of the past year, insurers are looking for a solution that protects not only their business, but also their clients. EasyDebit provides that solution in the form of a far-reaching digital safety net.

The statistics are shocking: in 2021, the Association for Savings and Investment South Africa (ASISA) detected R787.6 million worth of fraudulent and dishonest claims – a total of 4 287 cases. Eye-opening though this figure is, what makes it even more alarming is the fact that it represents a significant increase on the previous year: In 2020, the number of fraudulent claims stood at less than 3 500, worth R587.3 million.

The reason for this increase is obvious, says Junior Biola, CEO of EasyDebit. “South Africans are experiencing enormous financial pressure at present; partly because of the fallout of the Covid-19 pandemic and partly because of recent inflation.” For insurance customers who are less than scrupulous, insurance fraud presents a seemingly quick and easy solution to their financial woes: after all, there are no obvious victims – aside from the insurer, that is, and in most cases, fraudsters are able to reason that the company can absorb their claim. However, when insurance companies have to pay out more claims, they are forced to find a way to maintain the reserves. The only way to do this is by increasing premiums.

Biola notes that fraud may take several forms – some of which lead to actions which are undeniably bizarre. For example, in recent months, a case made headlines when a nurse used the blood of an HIV-infected individual to claim for becoming infected through a needle-stick injury. Although it’s seldom that claimants will take such drastic action, it’s not unheard of for people to stage accidents or even fake an injury or death. Most often, however, fraud entails submitting a false claim, inflating claims or using falsified documents to misrepresent a beneficiary. Biola reports that, in these stressed economic times, the most common form of fraud involves submitting fake funeral policy claims, as well as cases of non-disclosure. In some cases, beneficiaries present fake death certificates of loved ones so that they can lay a claim for a funeral or life insurance policy. There are even people who pose as policyholders or beneficiaries so that they can make a claim.

The nature of these frauds points to the need for companies to protect themselves with identity verification and deceased status checks, which should form part of a holistic system of digital checks. For example, EasyDebit’s approach includes not only this, but also bank account verification, which helps guard against fraudsters who advise of a change of bank account details, resulting in claims paid to the falsified account. The suite of products further encompasses biometric verification. These real-time tools may be integrated as part of insurance companies’ policy management systems, helping to mitigate fraud across the organisation.

The result? Greater protection against fraud for insurers – which means their policyholders are protected, too.


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