Warning over deadly new fraud trend emerging in South Africa
The Association for Savings and Investment South Africa (ASISA) has flagged concerning trends that have emerged in recent years, which have helped exacerbate fraud and dishonesty cases in life insurers and investment companies.
These are murder for insurance payouts and deceased estate fraud.
This comes as the association recorded 13,074 cases of fraud and dishonesty in 2023, a 46% increase from the 8,931 seen in the previous year.
The industry lost at least R175.9 million to fraud and dishonesty in 2023, which amounts to a 128% increase from the R77.2 million lost in 2022.
Convenor of the ASISA Forensic Standing Committee Jean van Niekerk said that the trends of murder for insurance payouts and deceased estate fraud is particularly concerning.
“We have requested ASISA members to report on these cases separately, starting with the 2023 statistics, to help our industry find ways to clamp down on these cases with urgency,” said van Niekerk.
Murder for insurance payouts
Murder is an incredibly serious crime, and van Niekerk said that committing insurance fraud to benefit financially from someone’s death is not only highly callous but also premeditated to the extreme.
He adds that while criminals often see insurance as a highly lucrative target, cases involving premeditated murder to benefit from an insurance payout are not that common.
Out of the 4,130 insurance fraud cases reported for 2023, 14 cases related to the involvement of a beneficiary in the insured’s death.
“Every death is one too many, and life companies are constantly updating their processes to ensure that risk policies are taken out only by honest policyholders to provide for their families,” said van Niekerk.
“Unfortunately, someone with criminal intent will always find a way of cheating the system and hope to get away with it and sadly, their modus operandi often involves family members or vulnerable or desperate members of society,” he added.
Van Niekerk points out that the recent case involving a police officer in Limpopo and others like the Rosemary Ndlovu case have shown that criminals are not likely to get away with this type of crime.
“While life companies pick up on this type of crime very quickly through their data-sharing initiatives, the process of gathering evidence and building a case that will stand up in court is often a slow process,” said van Niekerk.
“While the Limpopo arrest has occurred recently, the investigation was prompted by an alert from life companies many months ago,” he added.
Deceased estate fraud
Van Niekerk says life insurers and investment companies noticed a new trend whereby criminals target deceased estate benefits and investment accounts.
Deceased estate fraud is committed by impersonating legitimate parties and fabricating letters of executorship and other documents, as well as opening fraudulent bank accounts in the names of beneficiaries by impersonators and false executors.
In 2023, life insurers reported 20 cases and investment companies, 34 cases, which amounted to millions of rands in actual losses.
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