Momentum Insure has examined some of the biggest insurance scams in South Africa, with fraudsters defrauding South Africans of their vehicles, savings, and personal belongings.
The insurer said many criminals are impersonating policyholders and brokers to obtain copies of clients’ policy schedules and claims histories.
The criminals then use this information to conduct criminal activity, including identity theft, submitting false claims to receive payouts to their bank accounts in their policyholder’s name and financial fraud.
“Syndicated scams are even approaching vulnerable employees of insurance companies to coerce them into selling registration documents or vehicles that have been recovered after the theft and kept as salvage,” said Funeka Ngewu, Executive Head of Claims at Momentum Insure.
Scammers are also creating fake accounts and tricking consumers into thinking they’re paying insurance premiums or buying new insurance products when they deposit funds into bogus accounts.
The phenomenon of fake identities is not uncommon. Meta showed that around 5% of its 2.59 billion active Facebook users are fake.
“We’re seeing a lot of claims where clients are unfortunately handing over their car keys to scammers who pose as buyers falsely claiming that they’ve transferred funds, for the purchase of the car, into a client’s bank account,” says Ngewu.
“In some cases, we find that some clients are involved in the scam and work with a scammer to swindle their insurer.”
False claims submitted by policyholders, including police claims where the insured has not shared important information with the insurer, are some of the industry’s most common scams.
Ngewu added that this is often due to a misconception that insurance companies can self-fund these losses and won’t “miss” the money. However, this has a direct impact on insurers’ profit margins, which results in higher insurance premiums for all policyholders.
“We have put some measures in place from a fraud module perspective and created specialised tools and systems to detect fraudulent claims. As such, several scammers have been caught, and some are facing criminal charges,” added Ngewu.
How to not fall victim
Taking steps to avoid falling prey to criminals is often the first step in keeping oneself safe.
Insurance customers should question everything – especially if an offer seems unrealistic, rushed or too good to be true.
“Before making a purchase online or handing over any personal information, be sure to verify the credentials of the person or company you are transacting with,” said Momentum.
“Insurers also play an important role in protecting policyholders against fraud and scams. Always check with an insurer before purchasing any insurance products or agreeing to any services.”
“In the event of an insurance scam and/or fraud, the insurer can also assist in investigating the incident by reviewing any relevant transactions or communications related to the scam and providing advice on the claims process.”
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