Category: Insurance News / Short Term Insurance / SAIA / October 2005

Insurance fraud - how it affects your insurance

Fraud continues to be very costly to the industry.  What the consumer needs to realise is that it is the honest insurance customers that are subsidising those who commit fraud in the form of increased premiums.

Therefore, honest customers should actively assist the industry in trying to stamp out these illegal practices.

Consumers need to work with the insurance industry to stamp out fraud - this will take the pressure of the honest clients that are currently carrying the weight of the few that take advantage of the system.

Client-industry interaction on the fraud issue has greatly improved following the establishment of a fraud line by the South African Insurance Association (SAIA) in cooperation with Deloitte and Touche. When a tip off is received the industry as a whole is notified, not just the particular insurer.

Those found guilty of insurance fraud are handled as criminals, and in addition to receiving prison sentences, offenders may also be fined, usually between R3 000 and R10 000. Consumers need to be aware that if found to have committed insurance fraud and convicted, they will have a criminal record that will prevent them of obtaining insurance for any possessions for the rest of their lives.

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