No room for fraudsters – insurers take a firm stance

South African life insurers remain ‘100% committed’ to paying out all genuine claims, but are cracking down on attempted fraud and dishonesty as the number of irregular claims continues to climb.

Brad Toerien, chief executive of life insurer FMI, a division of Bidvest Life Ltd, said there had been a significant increase in fraudulent claims in South Africa in recent years, costing the industry and policyholders more than R1 billion in 2017¹. According to industry body ASISA, the number of fraudulent death claims jumped from 444 in 2016 to 2111 in 2017 – an increase of 4 times in just one year.

What is insurance fraud?

Insurance fraud takes place when claimants attempt to gain benefits they are not entitled to. This includes falsifying documents at application and claims stage, and exaggerating impairments to get disability benefits.

“As life insurers, we want to pay claims. It’s why we exist. We will always try to find a way to pay the claim, and we give clients the benefit of the doubt even in tricky cases that aren’t black and white,” said Toerien. “We don’t just pay claims for the sake of our reputation: we do it to help clients in their time of need, and to help get them back on track by paying them an income when they need it the most.”

“But insurance fraud has a major impact on all stakeholders, and it’s ultimately the premium-paying customers who suffer the most, as they carry the cost of ever-rising insurance premiums. This is why insurers need to have a zero-tolerance stance on fraud,” he said.

Life insurers under fire

Life insurers often come under fire as they attempt to adapt their methods of detecting increasingly sophisticated fraud attempts. One such method is surveillance, an industry practice that is only used as a last resort when there is a suspicion of fraudulent activity. In its 23-year lifetime, FMI has used surveillance in less than 0.5% of all claims – and in 70% of cases, the findings verify the customer’s claim as genuine.

“Decisions to decline a claim have a real impact on people’s lives, so we try to make the best possible call for our customers with the information presented to us. But it’s also critical for policyholders to understand that as an insurer, we also have an obligation to all other policyholders,” said Toerien.

Empathy and Integrity

In the end, a successful relationship relies on a balance of empathy and integrity on behalf of the insurer (and all stakeholders), and a commitment from clients to stay informed and up-to-date on the cover they select, as well as the terms of their policy. Bottom line: as a customer, if you are uncertain whether any lifestyle changes affect your policy – talk to your financial adviser.

Follow these 6 tips from FMI to ensure your claim is paid:

• Don’t lie or falsify documents at application or claim stage. Not only would this jeopardise your claiming ability, but this could result in serious criminal charges – having a dire affect not only on yourself, but your loved ones too.
• Give complete information during the insurance application process. Rather give too much information when applying for cover, than too little. If you’re seeing a doctor, say so. If you’re not sure about the type of medication you’re on, check. Give details. Check with your doctor or medical aid for specific details of a condition or medication, if necessary. Don’t rush documentation, give it the thought it requires.
• Know what you’re buying. It’s vital that advisers and customers take the time to understand the product and cover they have selected. FMI encourages all South Africans to consult a financial adviser for additional information and advice.
• Ask questions. If you’re not sure what a question means, or what information is being requested, ask.
• Stay updated. If your personal circumstances change, make sure your insurance policy is updated accordingly to ensure your cover is up-to-date. This includes occupational changes (including career moves, starting a business or even salary adjustments), as well as lifestyle changes (including certain habits or hobbies may influence a policies’ terms).
• When it comes time to submit a claim, take the time to consider the condition you are claiming for, and the impairment as a result of your condition. Being 100% open and honest with your insurer and your adviser is critical.

 

Conclusion on fraud

“Insurers and customers have the same goal in mind – to protect the income they are yet to earn, and ensure their ability to provide for themselves and those close to them. By helping South Africans to understand the terms of their cover, and equipping advisers with the tools to offer the best possible product solution, we can continue to make progress toward that goal. But intentionally misrepresented and dishonest information affects the entire industry and severs trust between clients, advisers and insurers. Trust is something that needs to be rebuilt in our industry – so that more South Africans have the cover they need, when they need it most,” said Toerien.

 

All info was correct at time of publishing August 22, 2019