Funeral Insurance Industry Fraud
June 19, 2018
The South African funeral insurance industry suffers from massive fraud. Short-term insurers estimate that as much as 1/3 of claims paid are questionable. And they say the insurance industry loses well over R5 billion annually.
Add to that the havoc caused when living people find out that they have actually been ‘dead’ for some time.
State mortuary staff as well as private funeral parlours are involved with syndicates. Insiders alert them when an unidentified body arrives. This is the time a fraudulent death certificate is issued and a claim is made.
Perhaps the person had a policy and the syndicate submitted a fraudulent death claim without the insured person’s knowledge. Or a funeral policy was taken out on a person’s life by the syndicate. The syndicate paid the premiums during the waiting period of the policy.
Funeral Insurance Industry Fraud – Corpses Play a Role in Get-Rich-Quick Schemes
Funeral insurance companies have their full quota of dealing with people who steal ID cards and corpses. They then claim from various life insurance companies.
They claim to be relatives of the corpses and claim thousands of Rand in life insurance and funeral benefits.
Always make sure that the person selling you the policy has a Financial Services Board license.
Make absolutely sure the company is a registered long-term insurer. Make sure that you get a receipt each month for all the cash payments you make towards the policy premium. Check the receipt as it should have the insurance company’s name displayed on it.
Funeral Insurance Industry Fraud – Deliberate Misrepresentation of Facts
Fraud in South Africa is the deliberate misrepresentation of facts so that certain people can gain financially at the expense of businesses, individuals and government. The simple fact is that the funeral insurance industry in South Africa is rife with fraudulent activities, and not just from policyholders but also intermediaries who want to defraud policyholders.
KwaZulu-Natal leads the way when it comes to funeral insurance fraud while the Eastern Cape isn’t far behind. The sale of funeral as well as entry level policies has rocketed, and funeral service providers are battling to verify and investigate claims according to the Association for Savings and Investments South Africa (Asisa).
Most claims detected by South African life insurers involve dishonesty through misrepresentation as well as material non-disclosure as apposed to the criminal intent of fraud. Misrepresentation occurs when a policyholder provides misleading information to a life insurer.
A typical example of this is when a policyholder adds children who aren’t their own to a funeral policy so as to benefit from the free benefit for children.
Funeral Insurance Industry Fraud – The Losing Battle of Doing things the Right Way
There are policyholders who try to keep their premiums as low as possible, and to do this, they don’t disclose all risks. They want to get as much cover as possible without paying for it. Dishonest policyholders risk losing their cover.
In South Africa, funeral policy providers have had to come up with all kinds of costly fraud detection mechanisms for early detection of fraudulent cases.
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All info was correct at time of publishing