Insurance Fraud in South Africa

Insurance fraud is such a major problem in South Africa that insurance companies have special “security branches” to weed out criminals who try to game the system. Rip-off artists operate and then make false claims, costing insurance firms billions of rands and sending premiums through the roof.

In the past fraudsters mainly committed “old style” insurance fraud, such as pretending to lose a valuable object and then claiming for it, or staging an accident. For instance a motorist will suddenly hit the brakes hoping that someone goes into him so he can fake an injury. Or someone will create fake vehicle registration or a receipt for a non-existent valuable item, such as a painting or a collectible car, report it stolen and collect the money.

But in these harsh economic times the fraud methods are getting more sophisticated. So are the methods by which insurance firms identify possible fraud.

Here’s what investigators do to catch insurance fraudsters:

• A basic cross-check is the first step investigators take when sniffing out a scam. They simply look for a pattern in payments. If the same person is getting lots of pay-outs that’s a warning sign. In the same way if a lot of payments are going to the same address or bank account, even if the names are different, that is another indicator of possible fraud. A large percentage of fraudsters are caught in this way.
• Insurance investigators have a list of “suspicious loss indicators” that can lead them to a bogus claim. Some of the examples include a claimant being calm and unflustered after submitting a claim, for example, or if he submits handwritten receipts for the item covered, or if he increases his insurance cover just before submitting acclaim, or if there was a fire following a family argument, or if someone submits a claim just after being retrenched.

There are some things you can do too, to avoid this type of insurance fraud. Check the bills for medical services, car repairs, etc. to make sure they are accurate, call the police if you have a bumper bashing or get witnesses to see what has happened, and beware of lawyers and doctors who try to push you into making a personal injury claim. They could be in in it together.