Fraud with claims We hope that you and your family enjoyed a well-deserved holiday. This weeks claim rejection reason focuses on Insurance Fraud. The jury is still out on exactly how much insurance fraud costs the industry each year (estimated at around R4b a year). The South African Insurance Crime Bureau (SAICB) estimates that 30 percent of claims contain some fraudulent element. The reality is that fraudulent behaviour is subsidised by good clients, and thus, it is essential for an insurer to detect and weed out fraud through internal checks and balances. From the onset, it needs to be mentioned that clients committing insurance fraud are not professional criminals. Identifying fraudulent claims is, therefore, easily spotted by the trained eye. This is specifically mentioned because most people about to commit insurance fraud falsely believe that the insurer handles too many claims and will never be the wiser. The majority of insurance companies have sophisticated methods backed up by processes and procedures to curb fraud. Fraud comes in various forms; however, the most common is the inflation of claims. The client suffered an honest loss and rather than claiming for the items stolen, clients inflate their claim by declaring that bigger and better items were affected. There is no such thing as fraud “lite”, and these claims are dealt with the intensity it deserves. The client is left with his/her entire claim being rejected, policy cancelled due to fraud, and possible prosecution – the client is then significantly worse off than they had been. It is important to note that once an insurance company cancels a client due to fraud, no other insurance company will be able to offer the client cover. This has far-reaching effects when considering financing a house or insuring vehicles, as the finance cannot be approved if the client is unable to secure insurance. The most common reason for clients committing insurance fraud is bad advice from family or friends. Many clients are under the assumption that the insurer will reduce the claimed value by means of applying an average or excluding certain items, and then justify inflating their claim to combat this perception. It is a fallacy, and clients are warned against taking advice from family or friends and should much rather ask a financial adviser or specialist for advice. Momentum
Posted on: Thu, 15 Jan 2015 10:51:07 +0000
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