Life insurers saved R347-million in 2005 by preventing dishonest policy holders and financial advisers, as well as crime syndicates, from making fraudulent claims.
This was an increase of nearly 40% on the previous year, Gerhard Joubert, chief executive of the Life Offices’ Association (LOA) said on Thursday.
”Life offices are becoming increasingly resourceful in clamping down on claims fraud. As a result a record number of 8 660 fraud cases were uncovered and reported last year,” Joubert said.
Although increased awareness and successful clamping down on fraud was pushing statistics up substantially, dishonest claims were also on the rise, he said.
Joubert said life insurers were left with no choice but to reject 1 919 claims to the value of R157-million in 2005 because policy holders had failed to disclose important information about a medical or lifestyle condition.
”It is generally accepted that the applicant knows more about the risk to be insured than the insurer. For this reason the law compels applicants to honestly disclose all information likely to influence the judgement of the insurer when determining appropriate policy terms and premiums.”
Another 2 748 claims worth more than R138-million were rejected last year because policy holders did not fully disclose the seriousness of a medical or lifestyle condition on application.
”Last year only 321 cases of reported claims fraud to the value of R2,1-million involved financial advisers, usually for submitting fictitious policies and invalid claims or for assisting clients to obtain cover at lower premiums by not disclosing important information,” he added.
The number of cases involving financial advisers has come down dramatically from 2004, when 809 cases were reported to a value of R15,6-million.
Dishonest beneficiaries and criminal syndicates were involved in 57 cases.
In addition, the industry reported 3 615 cases to the police because they involved fraudulent documentation and forged paper work.
Joubert said the highest number of fraudulent claims were submitted in Gauteng, which had 30%, followed by KwaZulu Natal at 26%. The North West Province had 13% followed by the Western Cape at 10%. The Eastern Cape had 8%, the Free State 6% and Limpopo had 3,4%. Mpumalanga had 3%, the Northern Cape had 0,4%, and other African countries had 0,2%. – Sapa