For as long as insurance has been around – there have been insurance scams. People often make false claims, which ultimately cost firms a ton of money and send our premiums sky-high.
It’s easy to understand why some people may be tempted to take the low road. Health insurance in this country is about to cover less than your hospital gown does.
Insurance fraud, however, is a lot more difficult to pull off than you might think. For these scams to work, you have to swindle investigators, detectives, doctors and even your friends and family. You have to live your lies.
We’ve all heard about that one person who ‘slipped’ and fell in Pick n Pay and went on to collect a huge settlement. Or the motorists who suddenly slam on the brakes, hoping that somebody will rear-end them so that they can fake an injury. How about ‘losing’ a valuable object and then claiming for it?
These are pretty ‘old school’ ideas – these days the fraud has gotten a little more sophisticated. These scams are such a big problem in South Africa, that insurance companies actually have advanced forensic specialist security branches to tell the scallywags from the good, honest folks out there.
The first thing investigators do is perform a basic cross-check. They look for patterns in payments. If you’re receiving a lot of payouts, let’s say, to the same address or bank account – that sets off the warning bells.
Likewise, if you’ve submitted many claims in your lifetime or received payments under different names. These are also a big indicator of possible fraud.
Home owner and car insurance are the most popular. Many fraudsters are caught reporting their cars missing when in reality; the car is hidden away in a buddy’s garage.
Investigators use a list of ‘suspicious loss indicators’ to determine whether or not a claim could be bogus. Such as when a claimant appears cool and composed after submitting a claim, or when receipts are handwritten.
People are often silly enough to increase their insurance cover just before submitting a fraudulent claim, or crash their car into a tree two days after losing their job.
If anything seems suspicious, investigators will then do an in-depth study of your life. They’ll look at your criminal records and credit record. They might even shadow you to see if you display any absurd behaviour.
These investigators know when a fire was started deliberately or not. They can determine if your injuries or vehicle damages match the reported accident and will conduct full financial reviews on you. Claimants who are behind on any payments are flagged as possible scam artists. They may even turn to social media. Supposedly suffering from terrible back pain after a fender-bender? That video of you table-dancing down at the Shimmy Beach Club last weekend says otherwise.
A form of insurance fraud on the rise involves physicians, clinics or chiropractors submitting an inflated bill to the insurance company. They may be charging for goods never used, treatment of non-existent injuries or procedures that were never performed. You may be suffering from genuine back pain after an accident, and sometimes these people will try to get you to participate in the fraud.
Even if you refuse and it isn’t your fault, when the scam is eventually uncovered, you may be dragged into it. These instances eventually result in nearly unaffordable medical aid premiums for everybody else.
Hospital plans have also posed a problem in South Africa for some time now. TV ads promise us large amounts of cash for every day we spend in hospital – resulting in many people flooding already-strained hospitals instead of trying to stay healthy. Hospital insurance does not commonly cover your hospital bill or the cost of any operations. They pay cash per day, regardless of what medical procedures you’ve had.
Therefore, these plans encourage collusion between doctors and patients to extend hospital stays and cash in, which could be up to R5 000 a day.
Car owners sometimes try to get the panelbeater to quote on more than the actual damage incurred. Or, they'll ask them to add the excess amount to the bill.
Because car repair businesses are adept at all kinds of fraud, such as using reconditioned parts and charging for new ones, most panelbeaters are willing to comply.
Crash For Cash scams are also prevalent. While insurance firms are able to spot a scam a mile away – regular drivers can’t.
These types of scams could involve other drivers forcing you to rear-end them in traffic, tricking you into merging right into them or manoeuvring you into other unavoidable accidents. Because so many people are so horrendously inept at driving these days, you might not realise that it’s a scam.
These scammers might cause a car accident for which you’ll get blamed, and your insurance company will pay for their damage. The scammers work alongside auto repair shops to claim for damages that are far higher than they realistically are.
Insurance agents commit fraud by pilfering a customer’s car or life insurance premiums. They just pocket the money and the policies are never actually purchased. Likewise, adjustors might take a cut.
A lot of insurance fraud involves the firm’s own personnel. For this reason, applicants with a bad credit record or any financial problems are unlikely to get hired.
It is estimated that fraud costs the short-term insurance industry up to R8 billion a year. In order to avoid being taken for a ride, it helps to know your broker or agent. Comparison shop and be an informed consumer. Always ask for proof of payment and a copy of your policy.
If you suspect fraud or a scam at play, contact the South African Insurance Crime Bureau and report it – 0860 002526 – firstname.lastname@example.org
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