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KZN and Eastern Cape: Hotspots for syndicate and fraudulent claims

Association for savings and investment South Africa logo
The report by ASISA shows that KZN and Eastern Cape have the most fraud cases. Picture: Provided.

By Nkululeko Zondi

The provinces of KwaZulu-Natal (KZN) and the Eastern Cape have been named as hotspots for syndicate and fraudulent insurance claims. This is according to a recent report by the Association for Savings and Investments South Africa (ASISA). Both provinces account for 64% of the fraudulent claims in the country.

Megan Govender, convenor of ASISA Forensics Standing Committee, said “In 2020, the lengthy COVID-19 lockdown prevented our forensic investigators from physically going out into the field." In-field operatives are crucial to uncover syndicate operations and investigate potential criminal activities, such as suspicious unnatural deaths.”

“There’s just been an increase in syndicates involved in our funeral claims, specifically in the last year,” said Govender. He said this is due to Covid-19 and the impact it had on the economy.

Govender also said that “individuals are seeing it as an easy means to make easy money, finding ways to knock off innocent people in order to benefit.”

ASISA is working with the South African Police Service (SAPS) to nip this in the bud.

SAPS Provincial Spokesperson, Brigadier Tembinkosi Kinana, has said that their “investigations have revealed that people have been insuring others as an opportunity to make money.” This is something that ASISA has also identified.

The SAPS has made some arrests in the Nelson Mandela Bay Municipality and OR Tambo areas, where “culprits seem to be taking advantage of vulnerable customers such as cash borrowers, heavy drinkers and financially struggling families to bury their loved ones,” said Kinana.

This is done by insuring victims with products with no waiting periods and very lucrative payouts.

Some of these syndicates include loan sharks and funeral parlour owners. Existing gaps in the insurance sector allow for the cover of even non-related people.

This is known as misrepresentation in the insurance sector. Misrepresentation happens when a person takes out funeral cover of someone they are not related to, such as a friend, by claiming them as family.

Funeral cover is meant to cover only policyholders direct and extended family


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