JOHANNESBURG — THE number of fraudulent and dishonest claims detected by the life insurance industry has decreased, but the total value of those claims increased, the Association for Savings and Investment SA said yesterday.

A total of 1 382 claims, worth R375,9 million, were detected in 2008, whereas 1 512 fraudulent and dishonest claims, worth R278,9 million, were detected in 2007, deputy chief executive officer Peter Dempsey said in a statement.

The value of the claims was the highest since the industry started collecting claims fraud and non-disclosure statistics in 2003. “While the industry has been successful in clamping down on fraud, the value of attempted cases has increased.”

However, the fraudulent and dishonest claims recorded last year represented less than one percent of total claims paid in 2008. “By far the majority of claims submitted are honest and legitimate and are therefore honoured by life companies.”

The life insurance industry paid beneficiaries, policy holders and pension fund members more than R180,6 billion in claims last year.

Cases of fraud involving intermediaries decreased from 38 to 34 between 2007 and 2008. The total value of such cases, however, increased from R6,1 million to R10,2 million over the same period.

Dempsey ascribed the decrease in the number of cases to tougher legislation that regulates intermediaries and their advice, as well as to increased consumer vigilance and early detection methods applied by the industry.

The highest number of fraudulent cases in 2008 was submitted in KZN (42%), followed by Gauteng (23%) and the Eastern Cape (12%).

Dempsey said if life companies do not try to prevent claims fraud it would ultimately force companies to recover losses from customers.

The five most common categories of insurance fraud are fraudulent and dishonest claims, material non-disclosure and misrepresentation, fraudulent documentation, beneficiary and syndicate fraud and fraud involving intermediaries. Misrepresentation involves policyholders not fully disclosing the seriousness of medical or other conditions because they could be charged a higher premium. — Sapa.

KZN: 42%

Gauteng: 23%

Eastern Cape: 12%

2008: 1 382 claims worth R375,9 million

2007: 1 512 claims worth R278,9 million