It is surely most annoying to honest car insurance customers when insurance companies are forced to increase their premiums to compensate for fraudulent activities carried out by other clients. The car insurance industry tries to minimise fraud, but fraud management is expensive. And so only so much can be done.
DISCLAIMER
Car insurance is not a simple matter, and so we would like to remind readers that this article is only about general information. If you would like to buy an insurance product, please consult a certified, financial advisor, who can provide you with sound, professional advice, or do thorough research before making a commitment.
FRAUDULENT CLAIMS ON THE RISE IN A BAD ECONOMY
With the economy slowing down and unemployment on the increase, many desperate people have turned to car insurance to make fraudulent claims. We are not referring to ‘small change’ here, but to billions of rands, all at the cost of the insurance industry, as well as the clients themselves. Adding to losses due to fraud, is the cost of fraud management itself. According to a Personal Finance article, people are desperate to try and survive.
CORRUPTION IS BECOMING THE NORM IN SOUTH AFRICA
The notion is, “Why shouldn’t I resort to corruption? Everybody else is doing it and getting away with it.” Corruption is becoming the acceptable standard in South Africa, as a means of procuring income. The tragedy is that theft is a downward spiral, where people start stealing small amounts initially. When they discover how ‘easy’ it is, the amounts become larger and larger. According to the South African Insurance Association (SAIA), the South African statistics on fraud compare well with international figures.
THE INSURANCE ‘RADAR’ WILL CATCH THE FRAUDSTERS
As thieves become more brazen in helping themselves to larger and larger amounts, the insurance ‘radar’ will detect them under its zero-tolerance policy. It is certainly not worth getting caught, because not only can the perpetrators face a possible jail sentence, but they could have a criminal record, which will affect them for the rest of their lives.
HOW RIFE IS FRAUD REGARDING INSURANCE CLAIMS?
According to the SAIA, about one third of all claims submitted each year could either be fraudulent or involve some degree of dishonesty. The deviousness and cunning planning for committing fraud are staggering.
WHO ARE THESE FRAUDSTERS?
There are two kinds of people who commit fraud. There are those who buy new policies for the sole purpose of stealing. Then there are the others, who are existing policy holders, claiming for an item that was not stolen, or inflating the actual cost of a stolen item.
LEGAL ACTION IS TAKEN AGAINST FRAUDULANT CLAIMS
Legal action is taken against many claimants, even after a claim has been paid out. The Insurance Crime Bureau detects and investigates insurance crime. The downside is that those who have been caught committing some fraudulent insurance act most likely will never be able to get cover again while living in South Africa.
IT’S YOUR RESPONSIBILITY TO PROVIDE ACCURATE INFORMATION
You, as policy holder, need to supply to the insurer correct information at all times. Many policy holders bought their policies after providing inadequate information so that lower premiums could be obtained. The problem comes at claim time. To have a costly claim rejected will cost you a lot more than any fraudulent ‘savings’ you may have made with lower premiums.
Even though financial circumstances may be dire, to resort to fraudulent claims with car insurance will sooner or later end in disaster. The problem with stealing is that it starts small, but, with time, one becomes more and more brazen. Insurance companies have their way of finding out, and they will very likely get hold of any offenders. It’s just not worth it.
AFFORDABLE CAR INSURANCE IS WAITING FOR YOU AT PMD
Talking about car insurance, why not buy an affordable product using PMD’s Online Insurance Purchase Platform? The whole process doesn’t take long and is easy to complete, at a time and place that suits you the best. The only time you may want to call someone via a call-back service is if you are having some problems. For extra information, you can access some audio and video materials.
Disclaimer:
This article was prepared by Eric Sandmann in his personal capacity. The views and opinions expressed in this article are the author’s own and do not reflect the views and opinions of Prime Meridian Direct (Pty) Ltd, FSP41040 (car insurance and life cover products). The views and opinions in the article should not be attributed to anyone but the author unless expressly stated. Nothing in this article should be relied upon as advice, this publication is presented for informational purposes only. No person should act or refrain from acting in reliance on any information found in this article, without first obtaining proper financial advice from the appropriate professional. The author makes no claims, promises or guarantees about the accuracy, or completeness, of any information linked from, referred to, or contained in this article. The author reserves the right, to edit and change the content of this article.