False Insurance Claims on the Rise

June 10 - Innocent insurance policyholders may need to foot the bill and pay the heavy cost of the rising incidence of false insurance claims, it was reported this week.

According to police and insurance investigators, "reporting bonus burglaries, hijackings, car thefts and so on" is on the rise and there has been a surge of over 10% of these types of claims.

False insurance claims are made on bogus crimes at a higher rate than normal and industry analysts say that the recession is directly to blame.

"Even though I cannot give the exact statistics, the most common cases are burglaries, hijackings and stolen cellphones," said Captain Zulani Zwane, a spokesperson for the police.

"In some instances, people have moved all their furniture to a relative's home and then reported it stolen so they can get a case number and make a claim from their insurance company."

"We are currently on the lookout for such crimes, because we understand that due to the economic crisis people are desperate and would anything to get extra cash," said Captain Zwane.

But while the economic pressure may be to blame, the insurance industry is showing no mercy to anyone found to have made a false claim.

"Most of the clients found guilty are handed over to the police for fraud, and their insurance gets cancelled," said the operations manager of the recently created Insurance Crime Bureau (ICB), Hugo van Zyl. "We will not tolerate people who commit such crimes, because no matter what the circumstances under which they do it, it is still illegal."

This type of crime costs the South African economy over R2 billion each year and to cover the costs, insurance companies need to increase the premiums on the policies - therefore forcing innocent consumers to pay the cost of fraud.

"What people must understand is that if you make false claims, it affects other consumers as their premiums go up because of the costs that the company ends up paying," said Outsurance executive, Trevor Devitt.