Latest news with #Asisa
The Citizen
6 days ago
- Business
- The Citizen
Life insurers settled 95.6% of all death claims in 2024, paid out R39.5 billion
Asisa started publishing the average pay-out rate of life insurers provide consumers with the peace of mind that valid claims are paid. Life insurers settled 95.6% of all death claims in 2024 and paid out R39.5 billion in benefits to beneficiaries of life and funeral policies . These life insurers are members of the Association for Savings and Investment South Africa (Asisa). The Asisa annual death claims payout statistics for 2024 show that life insurers processed 914 258 death claims against individual life, credit life, funeral and universal life policies. The statistics also show that 873 825 of these claims were paid and 40 433 claims were declined due to reasons such as dishonesty, fraud, or contractual exclusions, including suicide within the first two years after taking out the policy. Fully underwritten life policies are only issued if the individual policyholder has completed a full underwriting process, which involves a comprehensive assessment of the life insured's health and medical history. In 2021, Asisa started collating claims payout statistics for all types of life policies (fully underwritten and partially underwritten), as well as funeral policies. ALSO READ: Think twice before switching your life insurance Life insurance and funeral insurance payouts remained steady Gareth Friedlander, a member of the Asisa Life and Risk board committee, says for the past four years (2021 to 2024), the average claims payout rate for life and funeral policies remained steady between 94% and 96%. 'Since life companies exist primarily to provide consumers with the option of insuring themselves and their loved ones against the financial impact of an event such as death, disability, or critical illness, policyholders and their beneficiaries should be able to trust that their policies will pay out when a life-changing event occurs. 'A life insurance company will only decline a claim if there is evidence of a crime, the benefit definition is not met or an exclusion applies, the policyholder died during the waiting period, or if fraud or intentional dishonesty was evident.' This would, for example happen when a policyholder does not disclose important information about a medical condition or lifestyle when applying for the policy to secure cover and/or lower premiums. The 2024 claims payout statistics show that more than 95% of claims were valid and therefore paid, with only 4.4% of claims declined, highlighting the importance of being honest with the life insurer when taking out a life or funeral policy, Friedlander says. This table shows the Asisa claims payout statistics from 2022 to 2024: ALSO READ: Consumers bounce back as insurance policies increase Life insurance policies (including universal policies) Friedlander points out that the highest average claims payout percentage is typically achieved for life insurance policies (including the old universal life policies), because they require some form of risk screening, such as health assessments and lifestyle questions, before the applicant's life is insured. Life insurance policies can offer life cover worth millions of rands and the underwriting process reduces the risk of fraud and non-disclosure at the application stage. In 2024, 97.3% of claims against life policies were paid and 99.9% of universal life policies. ALSO READ: Old Mutual reports paying an average of R59 million per working day in life insurance claims Funeral insurance policies Funeral insurance policies are designed to pay out quickly and without hassle when an insured family member dies and typically do not require blood tests and medical examinations. Funeral policies are also restricted in terms of the maximum cover they can provide. Friedland says since there are no underwriting requirements for funeral insurance, it is often tempting for people to buy funeral cover only once they developed a serious illness and are expecting to die as a result. To prevent this, funeral cover usually imposes a waiting period of six months for deaths due to natural causes. Therefore, the payout rate for funeral policies tends to be slightly lower than for life policies but still exceptionally high at 94.7% in 2024. ALSO READ: Momentum Life pays out R6.6 billion in claims in 2024 Credit life policies Credit life policies are designed to cover loans should the policyholder die before the debt, such as a home loan or car financing, has been settled. The payout by a credit life insurance policy decreases as the outstanding loan amount decreases and once the debt has been repaid, the cover ends. Friedland says since premiums are worked into the monthly loan repayment, a default on the repayment also means that no premiums are paid to the life insurer and the cover therefore lapses. He points out that claims against credit life policies are usually declined because the cover lapsed due to non-payment of premiums or the outstanding loan balance had been settled. The average claims payout rate for credit life policies was 88.1% in 2024.
IOL News
02-08-2025
- Business
- IOL News
Asisa reports a rise in insurance fraud cases despite reduced losses
South African life insurers and investment firms successfully prevented R1.4 billion in fraud in 2024, despite facing R131.6 million in actual losses. This article explores the rise in detected fraud cases and the industry's response to combat financial crime. Image: Pixabay / File South African life insurers and investment firms prevented fraud and dishonest activity totalling R1.4 billion in 2024, according to the Association for Savings and Investment South Africa (Asisa). However, Asisa says actual losses incurred by the industry still amounted to R131.6 million, underscoring the persistent threat posed by financial criminals. Compiled by Asisa's Forensic Standing Committee, the association's annual statistics reveal a sharp 26% year-on-year increase in detected cases, rising from 13,074 in 2023 to 16,520 cases in 2024. Despite this spike, the Rand value of actual losses declined from R175.9m in 2023 to R131.6m in 2024, proof, the industry says, of its increasingly effective counter-fraud strategies. According to Jean van Niekerk, convenor of Asisa's Forensic Standing Committee, the R131.6m loss represents only 0.02% of total honest claims paid by Asisa members, which reached a record-breaking R639 bn in 2024. 'Our industry has always been seen as a soft target by criminals and dishonest individuals because of the significant amounts of investments and benefits being managed."But it is getting increasingly difficult to get away with fraud and dishonesty. If we allowed fraud to get out of hand, premiums would have to go up and ultimately, honest policyholders would be paying the price," Van Niekerk says. According to Asisa, fraud cases were categorised into five groups: remuneration fraud, fraudulent applications, fraudulent and dishonest life insurance claims, fraudulent withdrawals and disinvestments, and other forms of fraud. Remuneration fraud accounted for more than half of all cases. Asisa recorded 9,904 incidents of fraudulent commission and fee claims in 2024, up from 7,962 in 2023, it says. These involved misconduct by tied agents, call centre staff, and independent financial advisers. While R2.5 million in losses were prevented, the sector still suffered financial damage exceeding R19 million. Asisa says life insurance fraud was the second most common category. There were 5,505 cases reported, up from 4,130 in 2023. Fortunately, actual losses fell from R69.8m to R39.1m over the same period. One category, fraudulent withdrawals and disinvestments, showed a decrease in attack rate. But while fewer cases were logged, losses rose from R40.5m in 2023 to R44.3m in 2024. The amount of fraud prevented in this category also declined compared to the previous year, it says. The group says the industry is particularly concerned about violent crimes linked to insurance fraud and increasingly sophisticated deceased estate scams. In 2024, 38 cases of 'murder for money' were identified as part of fraudulent life insurance claims. To combat such risks, Asisa established two dedicated working groups aimed at preventing abuse of funeral policies. 'While we can confidently say that criminals are highly unlikely to get away with this type of crime, the ultimate goal is to prevent someone from losing their life in the first place. "Life companies pick up on this type of crime very quickly through their data-sharing initiatives, but the process of gathering evidence and building a case that will stand up in court is often slow," Van Niekerk says. Deceased estate fraud also presents growing risks. Criminal syndicates have been targeting the winding up of estates, often impersonating legitimate executors and fabricating documents to open bank accounts and siphon funds. Although only 161 cases were recorded in 2024, this marks a threefold increase from the 54 cases in 2023. The collective financial impact could have reached R220 million had the fraud not been detected, the group says. 'If we had not detected the 161 cases last year, our industry and beneficiaries would have lost R220 million to criminal syndicates,' Van Niekerk warned. In response, Asisa established an Estate Late Fraud working group and facilitated a Memorandum of Understanding among its members to promote data-sharing and trend analysis. Collaborative efforts with the Hawks, the Department of Justice, Crime Intelligence, and the National Prosecuting Authority are also underway. Van Niekerk stressed the importance of public awareness and proactive engagement. 'All financial services providers have fraud hotlines, and we call on consumers to report suspected fraud or suspicious behaviour immediately," he says. PERSONAL FINANCE
The Citizen
04-07-2025
- Business
- The Citizen
Thousands denied pensions as employers fail to pay
R5.2bn in pension debt owed by employers, mainly municipalities and security firms, leaves thousands of workers in limbo. A large number of municipalities and private employers who did not pay employees' contributions over to pension funds may face investigations. Their non-payments have tipped the new two-pot retirement system into turmoil. The employers are facing imminent investigation by the department of employment and labour, which is planning to flood them with labour inspectors to check their compliance status. Long list of companies, municipalities that violated pension fund They will also be sanctioned by the Financial Sector Conduct Authority (FSCA) which has a long list of private companies and municipalities that violated the pension fund rules and the law. An FSCA report showed municipalities and firms, mainly in the security and cleaning sectors, owe their employees approximately R5.2 billion in outstanding pension fund contributions impacting 31 000 people, with some cases dating back to the 2000s. Of the outstanding contributions, some R1.4 billion is owed by municipalities, affecting pension fund members' savings. ALSO READ: Industry leaders launch market surveillance code as Steinhoff fallout lingers The FSCA identified around 7 770 noncompliant employers, with 2 330 of them being publicly listed for violating Section 13A of the Pension Funds Act. Many employees, who were hoping to claim from their pension funds under the two-pot scheme, are crying foul after hitting a brick wall when they attempted to claim the 30% due to them under the two-pot system, which came into effect last year. The system has two pots – one is for savings and constitutes one third which goes into a savings pot and is accessible for withdrawal since September last year. The other two-thirds goes into the retirement pot to be kept in the fund until the pensioner's retirement age. Employees found their monies had been withheld The distraught employees found that their monies had been withheld by employers, particularly municipalities and the security and cleaning sector, that were all blacklisted by the FSCA. This means the contributors cannot claim the saving portion of their contributions. The Congress of SA Trade Unions (Cosatu) has taken up the matter on behalf of the affected workers, who inundated their various unions with complaints about how their employers had inconvenienced and prejudiced them due to nonpayment of their pension fund contributions. ALSO READ: Missing broker, missing money Cosatu parliamentary coordinator Matthew Parks said Cosatu has established a task force with the FSCA, National Treasury and the Association for Savings and Investment South Africa (Asisa) at the National Economic Development and Labour Council to deal with this crisis. Asisa represents the collective interests of asset managers, collective investment scheme management companies, linked investment service providers, multi-managers and life insurance companies. Parks said: 'It has the potential to get out of control. We're engaging the different sectors. Engagements have taken place with the SA Local Government Association and more are planned.' Potential to get out of control The department agreed to issue a ministerial directive to labour inspectors to check pension fund compliance by employers. The department also increased the number of labour inspectors from 2 000 by 10 000 this year and 10 000 to be hired next year. The FSCA is working with the National Prosecuting Authority to pursue criminal sanctions against offenders. NOW READ: FSCA juggling high-profile cases with limited resources
The Citizen
25-05-2025
- Business
- The Citizen
Who pays the bill for growing insurance fraud? You do!
Insurers are getting stricter as insurance fraud soars, which means consumers are paying more and risk having legitimate claims dismissed. Insurance fraud is increasing sharply and South African consumers are footing the bill. Insurance fraud is becoming more frequent, more sophisticated and far more expensive. Insurance companies lose more money and consumers are paying the price. In 2023 alone, South African life insurers and investment companies detected 13 074 cases of fraud and dishonesty, a staggering 46% increase from the previous year's 8 931 cases. Losses linked to these activities jumped by 128%, increasing from R77.2 million in 2022 to R175.9 million in 2023, according to the Association for Savings and Investment South Africa (Asisa). Liezel van der Schyff, manager of the private division at GIB Insurance, says this increase is not just due to more people trying their luck. 'We are seeing a definite shift in how fraud is perpetrated. It is more organised, more deliberate and often coordinated. It is no longer just individuals inflating a claim. There are syndicates, fake brokers and even inside help in some cases.' ALSO READ: This is why and how we can stop insurance fraud Spectrum of insurance fraud is widening From seemingly harmless exaggerations to fully fabricated claims, the spectrum of insurance fraud is wide and deeply damaging. Van der Schyff says a growing trend involves customers manipulating electronic device claims, often with help from repair shops or friendly IT contacts. 'For example, clients will claim their phones or laptops are irreparably damaged, supported by a manufactured damage report, to secure a brand-new replacement. If the device is discontinued, insurers are often forced to replace it with the closest equivalent – usually a better, newer model. It has become a clever way to upgrade your gadgets without paying for it.' Other increasingly common claims include lightning or power surge damage to electronics and roof leak claims, where many are maintenance-related and excluded from insurance policies. To counter these tactics, insurers rely more heavily on technology to vet claims, including requiring proof like IMEI numbers and blacklist references for mobile phones, or deploying assessors to physically inspect damage before approving payouts. ALSO READ: Life insurance fraud: Here's how innocent consumers are 'tricked' into becoming complicit Ripple effect of insurance fraud Van der Schyff says fraudulent claims like these also have a ripple effect on the entire pool of policyholders, where insurers are forced to increase premiums across categories that are considered high risk, including jewellery, electronics and portable tech. 'It is frustrating because the majority of policyholders are honest, but they are penalised for the dishonesty of a few.' Insurers are tackling these challenges by increasingly implementing fraud prevention strategies that leverage technology such as predictive analytics and AI-powered systems that flag inconsistencies across multiple data points, making it harder for fraudulent claims to slip through. Van der Schyff says insurers are also working together towards the common goal of stamping out fraud by sharing data to identify repeat offenders and syndicate activity, while internal forensic departments conduct investigations, sometimes even scanning social media to verify the details of a claim. 'If fraud is detected, the consequences are serious. The policy would be cancelled and the client is flagged across insurance industry records. If they try to take out a new policy elsewhere, they are legally required to disclose this history and many insurers will decline to cover them.' ALSO READ: Me, commit insurance fraud? Never! What can you do about insurance fraud as a policy holder? Van der Schyff says for consumers who try to stay on the right side of the claims process, the rules are simple: be honest, submit accurate information and notify your insurer of any material changes to your risk profile. 'Omitting details, like a new address, any changes in how a vehicle is used or new drivers, can lead to your claim being denied, or the policyholder even being accused of fraud.' She says consumers should also be wary of scams disguised as insurance communication. Fraudsters often use phishing emails and texts to trick people into clicking on malicious links or disclosing sensitive information. Poor grammar, strange formatting and a sense of urgency are often tell-tale signs of a scam. 'The reality is insurance fraud does not just harm companies but affects every single policyholder. We all end up paying the price, either in higher premiums or reduced cover. That is why early detection, data sharing and client awareness are so critical to keeping the system fair and sustainable.'
