Insurers implementing stringent measures to prevent fraudulent claims

Gavin Came, Chairman of the Financial Planning Committee at the Financial Intermediaries Association of Southern Africa (FIA)

More stringent measures being implemented by South African insurers to detect and prevent fraudulent death, disability and funeral cover claims reveals the importance that these companies are now placing on such action and the risks to consumers who choos

Latest statistics released by the Associations for Savings and Investment South Africa (ASISA) has revealed that the value of prevented fraudulent death, disability and funeral cover claims has risen significantly to R131.7-million in 2011 from just R26.2-million in 2010.

Gavin Came, Chairman of the Financial Planning Committee at the Financial Intermediaries Association of Southern Africa (FIA), says consumers may think that submitting a fraudulent or inflated insurance claim is not a serious offence and is an easy way to obtain additional money. “The fact is that insurers have introduced far more effective fraud detection methods and technologies, so it is becoming easier to identify and prevent these claims.”

“Anyone who attempts to recoup money by submitting a fraudulent insurance claim should be aware that they are likely be caught, which would result in a criminal investigation. In addition to criminal charges, consumers will also face having their claim rejected and potentially find themselves uninsurable in the future.”

He says that life insurance fraud involves intentional deception such as making deliberate misstatements on life insurance applications, providing inaccurate information about health conditions through to the extreme of even faking one’s death. “Ultimately it is better to be upfront with the financial services providers; if someone is found to be submitting a fraudulent claim then the policy can be declared worthless. It is important for consumers to remember it is likely to be their loved ones who ultimately suffer when the claim is repudiated”

Came advises any consumers who may be struggling financially to speak to a reputable financial intermediary about how they can restructure their financial plan to mitigate any financial difficulties.

He says consumers must understand the severe ramifications that a fraudulent claim can have not only on their own financial standing but also on the rest of the industry. “Inflating claims results in increased premiums across the board for the rest of the industry, as insurers need to recover the lost money, so fraudsters end up costing everyone more money.

“With the industry implementing advanced fraud prevention mechanisms and showing no tolerance of fraudulent claims, it is vital for consumers to be aware of the repercussions of being caught and instead seek out the professional advice of a financial intermediary if they are facing financial strain,” concludes Came.