South Africans buy and rent dead bodies for fraudulent death certificates, report reveals
Long-term insurers declined 698 irregular death claims worth R417.3 million in 2018.
A new report by the Association for Savings and Investment South Africa (ASISA) has revealed that South African life insurers detected 3,708 fraudulent and dishonest claims to the value of R1.06 billion in 2018.
The number went down from 5, 026 cases to the value of R1.13 billion in 2017.
Donovan Herman, convenor of ASISA Claims Standing Committee, said while life insurers were frequently accused by the public of trying to avoid paying claims, the real story was not always the case.
Most of the fraud took place in the funeral insurance industry, said Herman, with reports from the forensic departments of life insurers showing popularity in buying and renting of dead bodies for fraudulent death certificates.
1,127 of 1,915 rejected funeral claims in 2018 involved fraudulent documentation, revealed the report, with 156 fraudulent claims showing syndicate involvement and seven beneficiaries having been found to have caused the death of the policyholder.
“Unfortunately, this makes it tempting for criminals and dishonest individuals to take out funeral cover for people who do not exist with the intention of later submitting claims using death certificates issued for dead bodies rented or bought for the purpose of committing fraud,” said Herman.
Long-term insurers declined 698 irregular death claims worth R417.3 million, with fraud detected in 481 cases, while seven cases involved syndicate fraud and another 15 dishonesty by financial advisers. 195 claims were declined due to misrepresentation or material non-disclosure.
Misrepresentation and material non-disclosure by policyholders was the biggest reason for disability claims being declined in 2018. Out of the 530 claims not paid, 463 were rejected due to misrepresentation or material non-disclosure.
Some policyholders did not disclose existing health conditions to secure lower premiums, the report revealed.
519 hospital cash claims worth R3.2 million were declined.
Dishonest and fraudulent retrenchment claims decreased from 126 in 2017 to 46 in 2018, with 39 claims rejected due to misrepresentation and non-disclosure and seven due to fraud.
The most dishonest provinces were KwaZulu-Natal, with 35% of all fraudulent and dishonest claims, followed by the Eastern Cape with 18% and Gauteng with 17%. The Western Cape was responsible for 9% of claims declined due to fraud and dishonesty, while Free State, Limpopo, Mpumalanga, North West and the Northern Cape accounting for 5% or less fraudulent and dishonest claims.