Life insurers and investment companies in South Africa saw a 46% increase in fraud and dishonesty claims in 2023, resulting in a loss of R175.9 million.

The Forensic Standing Committee of the South African Savings and Investments Association (Asisa) released its second set of comprehensive fraud statistics for the industry this week and it showed that 13,074 cases were detected, a significant increase on of 8,931 cases detected in 2022.

Money lost due to fraudulent claims

The 175.9 million lei lost due to fraud and dishonesty in 2023 represents a 128% increase compared to the 77.2 million lei lost in 2022.

“Early detection of fraud and dishonesty prevented losses worth 1.5 billion lei in 2023, compared to 1.1 billion lei in 2022.”

Jean van Niekerk, convener of the Asisa Forensic Standing Committee, said it was important for the savings and investment industry to ensure that fraud remained under control to prevent fraud losses spiraling out of control and that higher claim rates increase premiums for honest policyholders. .

He acknowledged that most policyholders and beneficiaries are honest as 95.9% of R39.9 billion worth of payouts were made to 892 817 life and funeral policy beneficiaries in 2023.

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Loss minimization methods

Van Niekerk said there are several measures that have been implemented by life insurers and investment companies, such as the use of artificial intelligence, improved industry collaboration and improved authentication mechanisms such as biometric customer identification.

“In addition, forensic departments share data on criminal activity through industry bodies designed to facilitate the sharing of data to combat fraud and financial crime, including the Asisa Forensic Standing Committee.”

The committee’s goal is to reduce fraud by analyzing statistics to understand industry-wide trends, hotspots and emerging risks.

Crime for insurance payments

There was an emerging crime trend for insurance payouts. “Murder is an incredibly serious crime, and committing insurance fraud to profit financially from someone’s death is not only extremely callous, but premeditated in the extreme.”

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Van Niekerk said that while criminals see insurance as a very lucrative target, cases involving premeditated murder are not that common.

“Of the 4,130 insurance fraud cases reported for 2023, 14 cases were related to the involvement of a beneficiary in the insured’s death.”

Insurance killers

There have been high profile cases such as former police officer Rosemary Ndlovu. She was sentenced to life in prison for killing her relatives and partner for the insurance payments.

Van Nierkerk said the conviction shows that criminals are very unlikely to get away with this type of crime.

“While life companies deal with this type of crime very quickly through their data sharing initiatives, the process of gathering evidence and building a case that will stand up in court is often a slow process.”

Recent, alleged insurance criminal Rachel Shokane Kutumelaher older sister Annah Shokane and daughter Madjadji Flora Shokane abandoned their bail applications at the Polokwane Magistrates’ Court.

The three are charged with nine counts of murder, money laundering, receiving the proceeds of illegal activities, fraud and defeating the ends of justice.

Provinces with high cases of fraudulent claims

The report shows KwaZulu-Natal has the highest fraudulent and dishonest claims in 2023 with 3,625, up from 3,122. The second highest is Gauteng with 2,301 applications, up from 1,711.

However, the largest increase in South Africa was found in the Western Cape. In 2023, there were 1,633 fraudulent claims, which was a 60% increase from 1,020 in 2022.

Although the Eastern Cape recorded the third highest level of claims in 2023 (1,210), it was the province that saw the lowest increase at 8%.

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