Insurance fraud is common in South Africa, and there are a range of popular scams that manage to slip through, despite insurers’ best efforts.
Some clients take out life insurance before they get tested for a disease – a disease they already suspect they have – and others take out funeral policies for loved ones who are already ill.
According to the Insurance Crime Bureau (ICB), nearly 32% of South African insurance claims may be fraudulent. But apparently, this is in line with international standards.
As a result, insurance companies must protect themselves from fraudulent claims. In order to do so, insurers must confirm their client’s information when they take out a policy, and again when the client makes a claim.
Checking the Public Domain
Insurers can make use of information online, as well as information from public records. If you suddenly develop lung cancer, after having told your insurer that you quit smoking a decade ago, and they can prove otherwise with recent Facebook pictures, your claim may be rejected.
If you have an online blog, or website, or any other public social media account, your insurer may access this information and use it when they assess your claim.
Medical and Banking Records
Insurers are not allowed to access your medical or banking records without your permission. However, they can include a clause in your contract stating that you give them the right to request access to this information.
If they do, you still have the right to refuse. But this will be considered suspicious and, depending on the strength of their case, they might get a court order forcing you to surrender the information.
Information from other insurers
The South African Insurance Association created a database consisting of all the short-term insurance claims from the last decade. This can be accessed by insurers to help them verify information and make sure nothing has been omitted.
Long-term insurers, on the other hand, rely on shared statistics to clamp down on any trends in insurance claims which may be related to fraudulent activity.
The more fraudulent claims they find, the higher premiums may become. It’s ultimately in your best interest to be honest with your insurer, and to notify the ICB if you suspect any fraudulent behaviour.