Latest news with #R131.6m
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
IOL News
29-07-2025
- Business
- IOL News
SA insurers expose shocking ‘kill-for-cash' schemes and fraud frenzy
Murder, Mistakes, and Millions: SA Insurers Expose Shocking 'Kill-for-Cash' Schemes and Fraud Frenzy Image: Ai-Generated/Sora From shocking 'murder for money' cases to bank errors that drained customer accounts, South Africa's financial watchdogs and insurers are uncovering fraud and fixing costly mistakes – and the amounts involved run into the hundreds of millions. In fact, in the past year, of the 5 505 fraudulent and dishonest life insurance claims recorded by Association for Savings and Investment South Africa (ASISA) members, 38 were murder for money cases, its latest report showed. Jean van Niekerk, convenor of the ASISA Forensic Standing Committee, said that while all types of fraud and dishonesty are of concern, the industry is particularly focused on stamping out murder for insurance payouts and deceased estate fraud. In addition, ASISA members have picked up on criminal syndicates identifying deceased estates as a lucrative way of accessing large amounts of money, preying on people's grief and the slow and arduous processes involved in winding up the financial affairs of a deceased family member Although the numbers are still relatively low, incidents detected have tripled from 54 in 2023 to 161 in 2024. Even more concerning is the significant rand value of the fraud prevented. 'If we had not detected the 161 cases last year, our industry and beneficiaries would have lost R220 million to criminal syndicates,' says Van Niekerk. Of the 5 505 fraudulent and dishonest life insurance claims recorded by Association for Savings and Investment South Africa last year, 38 were murder for money cases. Image: ASISA Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ Ad Loading These findings form part of ASISA's annual fraud statistics compiled by its Forensic Standing Committee. It stated that its members detected 16 520 cases of fraud and dishonesty in 2024 – up 26% from 13 074 cases the previous year. Insurers and investment firms prevented losses of about R1.4 billion, although criminals and dishonest policyholders still cost the industry R131.6m. Van Niekerk said the loss represents just 0.02% of the R639bn in honest claims paid in 2024. He attributed the lower losses to improved detection tools and forensic teams. '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,' he said. Remuneration fraud, where agents or advisers dishonestly claim commissions or fees, accounted for more than half of all cases. Life insurance claim fraud was the second-largest category, while fraudulent withdrawals and disinvestments were the only area to see fewer cases, although actual losses there increased slightly. Meanwhile, honest customers are having to deal with miscommunication and unlawful deductions. Last year, the newly created National Financial Ombud Scheme South Africa (NFO) secured R328.5 million in refunds for aggrieved customers who complained about financial institutions. Its annual report shows that of the 28 002 complaints it handled between January and December 2024, 30% related to fraud. Maladministration by financial institutions and complaints from debt-stressed consumers were the second- and third-highest categories. 'These trends align with patterns observed in previous years, where fraud-related disputes consistently accounted for a significant portion of complaints,' the report noted. One case involved a South African customer who signed up for a personal loan over the phone. She believed the interest rate was 19.25%, only to later discover it was 29.25%. She asked the bank to review the rate. The bank said the higher rate was correct, based on her credit profile, and was legal. But when the NFO investigated, it listened to the call recording and found the customer had repeatedly complained about poor line quality. 'Based on the call it was probable that the complainant did not hear the interest rate correctly,' the report said of this anonymous example. Top complaints to the National Financial Ombud in 2024. Image: NFO Because of the bad call quality, there were doubts about whether she fully understood or agreed to the 29.25% rate. South African contract law requires both parties to agree clearly (a meeting of the minds), and banks must make sure customers understand the terms and risks of credit agreements. After mediation, the bank agreed to reduce the interest rate to 19.25% and refunded the difference from the start of the loan. In another case, a customer found R1 689.88 had been taken from his account without notice, leading him to lodge a fraud complaint. He had made a payment of R3 000 to a beneficiary, but a bank system error reversed it and credited the money back to him. He then paid it again – and the beneficiary ended up receiving both payments. Instead of fixing the error, the bank deducted R1 689.88 from his account and flagged a balance owing. The NFO found that the customer was not at fault and that the bank should have dealt directly with the beneficiary who was unjustly enriched. The bank refunded the customer and removed the flag from his account. Nerosha Maseti, Lead Ombud of the Banking Division, said 'bank customers have every right to expect good service and for complaints to be taken seriously'. IOL
