A growing number of fraud scams are being run by organised crime syndicates where criminals take out policies on fictitious people and then submit claims in respect of these policies using fake identity documents and unclaimed corpses from mortuaries, according to Cape Town-based insurance underwriter Desmond Smith.
Smith, managing director of RGA South Africa, says there is “a whole chain of involvement” in these scams.
“In some cases, people even acquired an unclaimed body to prove that death has taken place,” he said.
Ina van der Merwe, CEO of South Africa’s oldest and largest credentials verification company, Kroll MIE, confirmed that credentials fraud is rife and that the combined rate for fraudulent IDs, passports and qualification is running at between 15% and 20%.
“We know from the increased frequency with which insurance companies use our verification service and from sources within the industry that credentials fraud is rife.
“While it has been a major problem for a long time, there has been a definite upwards trend in the curve … currently between 15% and 20% of all the credentials submitted to us for verification turn out to be bogus to a greater or lesser extent,” she said.
Smith said white-collar crime is becoming endemic in South African society as many people see insurance companies as “fair game”.
He said life-insurance fraud is estimated to have cost the industry hundreds of millions of rands in 2003 alone.
Life Offices’ Association’s Gerhard Joubert said in a statement recently that the incidence of fraud in the long-term insurance industry is higher than expected.
“For the period January 1 to March 31 2004, the total number of fraudulent claims was 1 582 with a claims value of R72,2-million.”
He said among the major areas of concern is the use of false identity documents to claim or apply for long-term insurance products.
This compares with 2003, when the total number of fraudulent claims was 4 237 with a claims value of R247,4-million, he said.
The statistics show the incidence of fraud is “higher than expected”, said Joubert.
The highly respected Gartner Institute reported that seven million Americans fell victim to identity theft last year, which represents roughly 3,4% of the population. If this percentage is applied to South Africa, it would mean that about 1,5-million South Africans could expect to become the victim of identity theft.
Tom Bouwer, who heads up the commercial crime portfolio at Business against Crime, said white-collar crime — which includes identity theft and credentials fraud — is costing the country in excess of R50-billion yearly.
“This is more than the total revenue brought into the country by foreign tourists,” he said. — I-Net Bridge