The Association for Savings and Investment South Africa (ASISA) compiles industry fraud statistics and releases a fraud media statement annually, based on data provided by long-term insurance companies.1 Figure 1 shows the ASISA fraud statistics for the period 2018 to 2021. Apart from 2019, there has been an increase in fraud numbers year over year. ASISA noted that the highest incidence of fraud and dishonesty takes place in the funeral insurance space, followed by death products, disability, hospital cash plans, and retrenchment cover. The ASISA spokesperson was quoted as saying: “Since funeral insurance policies do not require blood tests and medical examinations and are designed to pay out quickly and without hassle when an insured family member dies, criminals and dishonest individuals most commonly try their luck in this space.”2
ASISA attributed the increase in 2020 to the COVID-19 pandemic and the tough economic climate it created. In contrast, ASISA attributed the increase in fraud numbers in 2021 to the deployment of more sophisticated fraud detection mechanisms in the industry, which allowed for an increase in the detection of fraud.
ASISA has yet to release the 2022 data but announced that its current areas of interest include material non-disclosure, fraudulent documentation, murder for money/“Killsurance” schemes (as coined by the Rosemary Ndlovu saga)3, and “paper babies”, where insurance is taken out on children who do not exist other than on paper.4Gen Re is keeping a close eye on these areas and monitoring any developments.
Gen Re’s experience in claims and risk mitigation processes has shown us that suspicious indicators of potential fraud include, but are not limited to:
- Early claims (date of event is within three years of the start date of the policy)
- Pressure from the financial advisor and/or claimants to make a claim decision quickly
- Irregularities on official documents or claim forms
- Vocabulary, grammar, or spelling anomalies on professional reports
- Recent policy and/or beneficiary changes
- Vague or unverifiable facts of loss
The survey identified several areas of strength and opportunity among participating insurers.