Fake life insurance claims down

Johannesburg - The number of fraudulent and dishonest claims detected by the life insurance industry have decreased, but the value of those claims increased, said the Association for Savings and Investment on Wednesday.

A total of 1 382 fraudulent claims, worth R375.9 million, were detected in 2008, whereas 1 512 fraudulent and dishonest claims, worth R278.9 million, were detected in 2007, deputy chief executive officer Peter Dempsey said in a statement.

The value of the claims was the highest since the industry started collecting claims fraud and non-disclosure statistics in 2003.

"While the industry has been successful in clamping down on fraud, the value of attempted cases has increased."

Fraudulent and dishonest claims recorded last year represented less than one percent of total claims paid in 2008, totalling R180.6bn.

"By far the majority of claims submitted are honest and legitimate and are therefore honoured by life companies."

Cases of fraud involving intermediaries decreased from 38 to 34 between 2007 and 2008. The total value of such cases however increased from R6.1 million to R10.2 million over the same period.

Dempsey ascribed the decrease in the number of cases to tougher legislation that regulated intermediaries and their advice, as well as to increased consumer vigilance and early detection methods applied by the industry.

The highest number of fraudulent cases in 2008 were submitted in KwaZulu-Natal (42%), followed by Gauteng (23%) and the Eastern Cape (12%).

Dempsey said if life companies did not try to prevent claims fraud it would ultimately force companies to recover losses from customers.

- Sapa