South African life insurers and investment companies detected 8,931 cases of fraud and dishonesty in 2022. While losses worth R1.1 billion were prevented, the industry lost R77 million to fraud in 2022.
South African life insurers and investment companies detected 8,931 cases of fraud and dishonesty in 2022.
KwaZulu-Natal has ranked as the most corrupt province when it comes to making fraudulent and dishonest claims, according to the Association for Savings & Investment.
In a recent report released by Asisa, KZN registered 3,122 cases, followed by Gauteng with 1,711 cases, Eastern Cape with 1,319 cases and the Western Cape with 1,020 cases in 2022.
The annual report, released last month, noted that South African life insurers and investment companies detected 8,931 cases of fraud and dishonesty in 2022. While losses worth R1.1 billion were prevented, the industry lost R77 million to fraud in 2022.
Asisa Forensic Standing Committee convenor, Jean van Niekerk, said the latest comprehensive report, which includes fraud reported by investment companies and a new category for sales fraud.
Previously, ASISA released only fraudulent and dishonest claims statistics reported by life insurers.
“The detailed fraud statistics provide a better overview of the magnitude of the problem the industry is grappling with. The statistics also send a strong message that the industry’s preventative measures to combat fraud are working,” Van Niekerk said.
“The committee significantly increased its focus on data collection and trend analysis in the past year because early detection of changing trends is key in the fight against fraud and dishonesty.”
According to Van Niekerk, other successful preventative measures deployed by life insurers and investment companies include the use of big data, machine learning, artificial intelligence, improved data sharing, and enhanced authentication mechanisms such as biometric customer identification.
Looking at various categories, the report shows sales fraud raked in the highest number of fake claims.
Van Niekerk said over half of all fraud cases recorded by Asisa in 2022 were classified as sales fraud.
“Sales fraud worth only R719,688 was prevented and companies lost R14.1 million,” he said.
“Sales fraud involves dishonest intermediaries writing up policies for clients without their knowledge to earn commission from the life insurer. In some cases, dishonest intermediaries colluded with human resources staff to obtain employee payment information.”
Meanwhile, 2,618 fraudulent and dishonest life insurance claims comprised 29% of total cases in 2022.
The report further states that the third-highest number of fraud cases was recorded for withdrawals and disinvestments from linked investment service providers (LISPS), collective investment schemes (CIS), and retirement funds.
Van Niekerk said these cases comprised 8% of the total number reported for 2022, with a value of R182.1 million prevented and R23.7 million lost.
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