Whether there has been an increase in funeral policy fraud or forensic services departments have just become better at catching the culprits, preliminary numbers for 2022 suggest that this scourge is not going away soon.
In May, South Africans sat glued to their screens when Showmax Original released Rosemary’s Hitlist, a true crime documentary about the cop-turned-serial-killer. Ndlovu made headlines in 2018 when she was arrested for orchestrating the murders of six family members to receive insurance payouts.
Viewers were shocked by what the former police officer did instead of upholding her oath to protect. Even more shocking is the fact that this kind of crime happens more often than anyone would like to think.
Last month, Thembi Sishi appeared in the Durban Specialised Commercial Crimes Court for a bail application following her arrest by officers from Durban Serious Commercial Crime Investigation. The former teacher was charged with 34 counts of fraud by misrepresentation.
From 2007 to 2017, she allegedly submitted fraudulent death insurance claims to various insurance companies. Sishi claimed that different relatives and biological children under her funeral policies were deceased. Some of them died of unnatural causes, said Hawks spokesperson Lieutenant Colonel Simphiwe Mhlongo.
According to claim statistics for 2021, released by the Association for Savings and Investment South Africa (Asisa) in May last year, funeral insurance attracted the highest incidence of fraud and dishonesty across the industry.
With the 2022 claim statistics set to be released soon, Moonstone checked in with a few industry leaders to find out how many of the funeral claims received by them in 2022 were submitted with fraud, dishonesty, or criminal intent and how these numbers compared with those from previous years.
Based on figures where an investigation was conducted by the Momentum Metropolitan Group Forensic Services investigation team, the insurance company detected 226 fraudulent funeral claims in 2022, compared to 183 in 2021. A total of 215 cases were flagged in 2020.
The Forensic Investigations team attributes the increase in 2022 to increased fraud awareness in the claim environment.
“However, the number is relatively stable,” the team says.
At Avbob, the numbers of claims found to be fraudulent also showed an increase between the 2021/22 (67) and 2022/23 (109) financial years. In 2020/21, a total of 114 fraudulent claims were logged.
Funeral insurance a ‘soft target’ for fraudsters
Funeral insurance policies do not require blood tests and medical examinations and are designed to pay out quickly and without hassle when an insured family member dies. This creates opportunities for misrepresentation in this space, states Asisa, most often when it comes to the relationship that the policyholder has with the person whose life is being insured. For example, funeral cover is designed to enable people to cover themselves and their extended families. When a policyholder includes his best friend and the friend’s family under the policy claiming that he is a brother, this is considered misrepresentation.
Avbob says that because funeral insurance is non-underwritten – meaning that no medical underwriting is required – it is also possible to insure extended family members with only a name and date of birth.
“This, due to social and practical reasons, makes it difficult to obtain ID documents at the issuing stage. It is, therefore, easy to take out a policy on someone’s life and then claim using a fake death certificate,” states Avbob.
It adds that extended family relations also create opportunities to falsify relations and insurable interest on extended family members.
“Collusion between medical practitioners and funeral parlours also creates opportunities for false death claims,” Avbob states.
The fact that funeral insurance falls into a high-volume, low-value product category makes it even more of a soft target for fraudsters. Momentum Metropolitan adds that market demands in terms of quick turnaround times at the claim stage put insurers under pressure to pay claims quickly.
“Fraudsters have also exploited the notion of ‘I am going to social media’ to put insurers under pressure to pay claims quickly,” states Momentum Metropolitan.
Fraud detection
According to Asisa, to ensure that fraudulent and dishonest claims do not go unchecked, the long-term insurance industry is constantly innovating preventative measures to combat insurance fraud, including the use of artificial intelligence, data sharing for early detection of trends and an increased focus on field investigations.
At Avbob, internal mechanisms have been developed to track and identify fraud.
“These are based on accumulated fraud trends information and risk scoring. Risks are identified during processing of claims.”
Abulela Gazi, distribution executive: Sanlam Developing Markets, says Sanlam has also taken a proactive approach to fraud prevention.
“Processes and controls have been put in place, as well as security features like authorisation through OTP, verification, and security software. This not only protects the business, but it also ultimately protects our clients’ information and their financial assets,” says Gazi.
Data-sharing enables insurers to detect multiple fraudulent claims lodged at various insurers, as allegedly perpetrated by Sishi.
Momentum Metropolitan says insurers are often targeted in this way.
“But certain cases will raise flags that will then require an investigation.”
In such instances, insurance companies share platforms or information regarding red flags. This process is centralised and managed through the data service company Astute.
The Insurance Crime Bureau (ICB) can also facilitate the sharing of information among participating companies on a claim level where certain claims have been identified as high risk.
Protect your identity
Criminals use identity theft and identity fraud to commit a host of crimes, including applying for insurance policies or submitting fraudulent insurance claims.
Gazi explains that these terms are used to refer to all types of crime in which someone wrongfully obtains and uses another person’s personal data in some way that involves fraud or deception, typically for economic gain. Gazi says, due to the wide range of methods available to thieves, it is very important that organisations do their part, but it is also important that individuals know how to protect themselves.
“It can happen in many ways, but the result is always the same; your personal information is used by someone who is not supposed to have access to it,” he says.
A very common method of stealing information includes obtaining it digitally through:
- buying information from the dark web after a data breach;
- contacting you by email or text to give up information; or
- a cyber attacker sending malware that extracts personal information.
“Thieves can obtain your information in-person by stealing your wallet with a driver’s licence and credit card, dumpster diving to steal sensitive documents, or even taking a picture of your screen in a public setting,” Gazi says.
Sanlam provides a few tips to prevent identity theft:
- Do not share your personal, banking or credit card information with people you don’t know or trust, and never give them access to your computer.
- Check your bank and credit card statements every month for suspicious activity.
- Request an annual credit report to check for any suspicious activity.
- Before you throw out personal documents, destroy them first by either shredding or ripping them up.
- Beware of entering competitions online where you must provide personal information.
- Activate privacy settings on social media sites and be careful what you post online, as information can be easily stored and archived, even if you delete it.
- Strong passwords are an ideal way to keep your accounts secure but, if additional security measures are available, enable them for an extra layer of protection.
What to do if you lose your ID or passport
If you misplace your identity document or passport, or it is stolen, you can register it with the South African Fraud Prevention Services (SAFPS), which is a non-profit organisation that aims to improve vigilance with regards to fraud, financial crime, and identity theft.
“The SAFPS aims to educate businesses and consumers about fraud and assist them to protect themselves. The protective registration service will enable you to enter your details on their database to inform their members that your identity has been compromised and that they should take additional care when confirming your identity,” explains Gazi.
The SAFPS also recommends that you make use of the free annual credit checks with one of the credit bureaus and check your bank statements regularly for any suspicious transactions.
If your ID book or passport is lost or stolen, you can call 011 867 2234 to register the details with the SAFPS, or email protection@safps.org.za.
Momentum Metropolitan recommends that if you suspect fraudulent activity using any of their company names or employees’ names, consumers can contact them (info@mmltd.co.za) to verify if correspondence is legitimate.
