Insurance fraud hurts innocent policyholders
Insurance fraud drives up everyone’s costs, even if you commit it accidentally.
South Africans are facing difficult times as costs are rising, and it is becoming harder to make ends meet. Under these conditions, fraudulent activities soar, and one industry that fraudsters frequently target is insurance.
Unfortunately, insurance fraud can be committed easily, even unintentionally. Accidentally entering the incorrect details could land you in a complicated situation. When you’re submitting a claim, make sure you’re free of distractions so you can focus on providing the correct information.
Insurance fraud costs insurance companies millions every year. Having a better understanding of what it is can help you avoid the trap and spread the word.
What is insurance fraud?
Insurance fraud is any act committed to defraud the insurance process and can happen with any kind of insurance. It occurs when the claimant attempts to obtain some benefit that they are not entitled to.
Why insurance fraud is bad for everyone
Many people think insurance fraud is a victimless crime, but that is not true. Fraudulent activities affect the lives of innocent people – either directly, through accidental or intentional injury, or indirectly, because policyholders will have to pay increased premiums. Insurance fraud is a real problem for everyone, and it's important for both insurers and clients to take a stand against it.
Different types of insurance fraud
Insurance fraud can be classified as hard or soft fraud.
Hard fraud
Hard fraud falls into 2 main categories:
- Planning or inventing a loss that is covered by your policy, like a vehicle collision or a fire.
- Making an event look like an insured risk covered by your insurance policy when it’s not.
Hard fraud schemes often involve professional criminals and can lead to significant losses for insurance companies.
Anyone claiming on the policy fraudulently can be held liable for fraud, not just the policyholder
Soft fraud
Soft fraud, also called opportunistic fraud, also falls into 2 main categories:
- Exaggerating a legitimate claim – for example, being the victim of a house burglary but claiming for more than was stolen.
- Insuring property for more than its real value so you can get a bigger payout.
In the health insurance industry, you are committing soft fraud if you give false information or withhold information about existing or previous conditions so that your premium will be lower.
Being found guilty of insurance fraud
An insurer’s policy terms and conditions tell you what will happen if you are found guilty of insurance fraud. Anyone claiming on the policy fraudulently can be held liable for fraud, not just the policyholder.
If you submit a fraudulent claim, we may:
- reject the entire claim, which means you will not receive a payout, even if some part of the claim was legitimate,
- recover any payouts already made in relation to the fraudulent or dishonest claim from whoever received the proceeds,
- or cancel your policy.
Nedbank Insurance has a zero-tolerance policy for fraud, and we’re committed to educating as many people as possible about insurance fraud so that we can all play a part in fighting it. If you have any questions or want to report any suspicious behaviour, please call us on 0860 333 111 or email us at insurance@nedbank.co.za
