WINDHOEK - The current recessionary economic environment appears to have aggravated the occurrence of fraudulent insurance claims being submitted by policyholders with criminal intent in their attempt to “ease their cash-flow situation”. This is according to Managing Director of Old Mutual Short-Term Insurance, Riaan Vermeulen, who says it appears that the efforts of the fraudsters are well pre-meditated before the execution of incurring a “loss” with fraudulent intent, after which an insurance claim is submitted in order to have the insurer financially “re-instate” (or indemnify) the fraudster to the position before the loss was incurred in accordance with the insurance policy.
“Regrettably, the occurrence and submission of fraudulent claims leads to extended claims verification processes, resulting in a longer time period before a claim is finalised. As all claims need to be thoroughly investigated, non-fraudulent claim submissions may suffer the same time delay consequence due to the additional investigations being conducted,” said Vermeulen.
In a recent statement, Vermeulen noted that investigations of suspicious claims submitted involve specialised investigative services, which are costly to incur. This, Vermeulen stated, is due to assessors or investigators being required to substantiate all findings with relevant documentation, photos, statements, etc., before reaching a final conclusion.
He further cautioned that an increase in such insurance costs can have a negative influence on insureds’ future premiums.
The current insurance practice, generally, categorises four types of insurance claim fraud. Firstly, staged claims involve vehicles which are written off intentionally and the loss is claimed from the insurer. Vermeulen said it appears that fraudsters are becoming more advanced in the execution of their devious activities.
Secondly, submission of false information is where people submit false information in respect of a claim to an insurer. Hence, the investigated facts of the scene do not support the submitted information.
Vermeulen stated, “Unfortunately, investigations are made difficult, whereby the perpetrators of fraudulent claims are receiving assistance and collaborate with other stakeholders. However, the investigators have developed good relationships with law enforcement services to combat fraudulent activities”.
The third type of insurance claim fraud entails non-existence of insured items, where a loss actually occurs prior to the item being insured and the insured only submits a claim after insurance cover is contracted.
The fourth type is inflated value of claims where the stated value of a submitted claim is above the actual value of loss of the insured item(s).
“The combatting of fraudulent claim activities remains a developing process for the short-term insurance industry, as fraudsters endeavour to become more advanced in committing their devious activities,” said Vermeulen.
He cautioned potential and existing fraudsters to be aware that fraudulent insurance claims may have them, and those who assist them, suffer various consequences, including not being paid out for a loss incurred on a fraudulent basis – thus, suffering financial loss due to the damage to or loss of their asset. Other consequences entail limiting the possibility of being insured in future; having legal processes instituted against them for fraud, and obtaining a criminal record.