Disturbing insurance trend emerging in South Africa
Life insurers in South Africa have flagged a sharp increase in cases where people are allegedly killed so beneficiaries can collect insurance payouts.
This is the feedback from the National Financial Ombud Scheme (NFO), which has warned about so-called “money for murder” cases.
In these cases, beneficiaries are accused of orchestrating or participating in the deaths of policyholders to gain access to life insurance proceeds.
According to the Association for Savings and Investment South Africa (ASISA), life insurers detected 38 murder-for-money cases in 2024, up from 14 cases in 2023.
The issue has prompted the NFO’s Life Insurance Division to call for stronger safeguards in the industry.
This includes a requirement that insurers obtain proof that a person whose life is insured has given informed consent before a policy is issued.
Denise Gabriels, Lead Ombud of the NFO’s Life Insurance Division, said the scheme has adopted a clear position when a beneficiary is facing a criminal investigation over the death of a policyholder.
“If a criminal case is opened against a beneficiary, it will not investigate his or her complaint while police investigations or court proceedings remain active,” she said.
The NFO said this approach is intended to protect the integrity of both criminal investigations and the financial dispute-resolution process.
Allegations that a beneficiary was involved in the death of a life assured must first be investigated by the appropriate authorities.
Where the beneficiary remains under suspicion, the NFO will generally refrain from ruling in their favour while a South African Police Service (SAPS) investigation is ongoing or criminal proceedings are before the courts.
However, Gabriels said this approach cannot mean that legitimate claims are left unresolved indefinitely.
“Where probes drag on unreasonably, or where police confirm that the beneficiary is not a suspect, insurers may be obliged to assess claims on their merits rather than leave families stranded in uncertainty.”
A mandatory consent requirement
Gabriels said criminal investigations and prosecutions can sometimes take years to conclude, and claimants may have no control over these delays.
“It would be unjust for insurers and beneficiaries to remain in a state of uncertainty indefinitely while awaiting the outcome of a criminal investigation that shows little progress,” she said.
“Accordingly, where there has been an unreasonable delay in finalising the criminal matter, the NFO may require the insurer to assess the claim on its merits based on the available evidence and the terms and conditions of the policy.”
The NFO said each dispute must ultimately be considered on its own facts, including the available evidence, the status of any criminal investigation and the interests of other affected parties.
The concern over insurance-related killings has also led the NFO to examine how policies are issued in the first place.
It believes insurers should be required to obtain the informed consent of the person whose life is being insured when another person takes out cover on their life.
“A mandatory consent requirement would enhance transparency, strengthen consumer protection, reduce opportunities for fraud and abuse, and assist insurers in verifying the legitimacy of policies at inception,” Gabriels said.
The NFO said this requirement would ensure that people know insurance cover exists on their lives, who took out the policy and the extent of the cover.
It has called on the Financial Sector Conduct Authority (FSCA), in consultation with industry stakeholders, to consider introducing conduct standards or regulations requiring proof of informed consent before policies are issued.
“While many insurers have processes aimed at confirming insurable interest and preventing fraud, industry practices are not always uniform,” Gabriels said.
“The NFO believes that a consistent regulatory framework would improve standards across the industry and promote better outcomes for consumers.”
While the NFO stressed the need to protect the industry from fraud and unlawful claims, it also emphasised that allegations do not prove wrongdoing.
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