Asisa reports a rise in insurance fraud cases despite reduced losses

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