From false and padded claims to fraudsters swindling unsuspecting South Africans out of their vehicles, savings and personal belongings, scams have been wreaking havoc and causing a ripple effect of damage across the insurance landscape.
Among the many scams occurring at the moment, insurers note an alarming rise in criminals impersonating policy holders and brokers to obtain copies of clients’ policy schedules and claims histories. The criminals then use this information to conduct criminal activity, such as identity theft, submitting false claims to receive payouts to their own bank accounts in the policy holder’s name, and financial fraud.
“Syndicated scams are even approaching vulnerable employees of insurance companies to coerce them into selling registration documents or vehicles that have been recovered after theft and kept as salvage,” says Funeka Ngewu, Executive Head of Claims at Momentum Insure.
Scamsters are also creating fake accounts and tricking consumers into thinking they were paying their insurance premiums or buying new insurance products, when in fact consumers are depositing funds into these fake accounts Ngewu said that some clients have lost money and fallen victim to this tactic.
This phenomenon is not at all uncommon. Meta recently revealed that of the 2.59 billion active Facebook users in 2023, around 4-5% of these accounts were fake. Recent research also showed an increase in brand impersonation schemes, with criminals impersonating prominent companies and creating fake websites to scam consumers into giving away personal data, payments and more.
“We’re seeing a lot of claims where clients are unfortunately handing over their car keys to scammers who pose as buyers falsely claiming that they’ve transferred funds, for the purchase of the car, into a client’s bank account,” says Ngewu. “In some cases, we find that some clients are involved in the scam and work with a scammer to swindle their insurer.”
False claims submitted by policyholders, including claims on policies where the insured has not disclosed important and relevant information to the insurer, are among the most common types of scams affecting the insurance industry.
Ngewu says that this often is the result of a misconception that insurance companies are able to self-fund these losses and won’t “miss” the money. The reality, however, couldn’t be further from this notion, as false claims directly impact profit margins, resulting in higher insurance premiums for all policy holders.
“We have put a number of measures in place from a fraud module perspective and created specialised tools and systems to detect fraudulent claims. As such, several scammers have been caught and some are facing criminal charges,” adds Ngewu.
Outsmarting the scammer
Dealing with an incident of being scammed is often stressful and emotional, and taking steps to avoid falling prey to criminals is the first step to keeping yourself and your loved ones safe.
Be sure to question everything, especially when an offer seems unrealistic, rushed, or too good to be true. Before making a purchase online or handing over any personal information, be sure to verify the credentials of the person or company you are transacting with.
Insurers also play an important role in protecting policyholders against fraud and scams. Always check with an insurer directly before purchasing any insurance products or agreeing to any services.
In the event of insurance scam and/or fraud, the insurer can also assist in investigating the incident by reviewing any relevant transactions or communications related to the scam and providing advice on the claims process.
PERSONAL FINANCE