Red flags to spot
INTERNATIONAL FRAUD Awareness Week, which took place from 15-21 November 2024, is a critical time to discuss how insurance fraud can impact policyholders, and what you can do to stay safe.
Insurance fraud costs the global economy billions annually, and South Africa has not been immune to this issue. In fact, in 2024 alone, South Africa’s insurance industry has lost an estimated R8 billion due to fraudulent claims, according to the South African Insurance Crime Bureau (SAICB).
Understanding the red flags associated with insurance fraud, and staying informed about new tactics, are essential steps toward safeguarding your policies and personal information.
Key warning signs
Unsolicited requests for personal information
Fraudsters often pose as legitimate insurance representatives, requesting sensitive information such as identity numbers, banking details, or policy information. According to SAICB, cases of fraud using stolen identities have risen by over 15% in the past year, with many instances involving fake calls or emails.
A reputable insurer will seldomly request sensitive information over the phone or email without prior notice. If you receive a call or email that feels suspicious, verify the source by contacting your insurer directly.
Pressure to act quickly
Scammers frequently create a sense of urgency, pressuring you to sign documents immediately or make rapid decisions. They might claim that an offer is only available for a limited time, or that immediate action is needed to avoid penalties.
Remember, a legitimate insurance provider will respect your right to make informed decisions, and won’t rush you. If you feel pressured, step back and verify with your insurance company before proceeding.
Offers that seem too good to be true
Promises of “guaranteed low premiums” or “immediate payouts” can be tactics used by fraudsters to lure policyholders into fake plans.
According to the Association for Savings and Investment South Africa (ASISA), more than R2 billion in fraudulent insurance payouts were attempted in 2024, often involving “too good to be true” offers targeting vulnerable individuals.
Always consult your insurer directly to verify new offers, especially those that seem overly enticing.
Emerging trends
Fraudsters are using increasingly sophisticated technologies to deceive people. Here are a few trends to be aware of:
Social engineering via social media
In South Africa, social media platforms have become hotspots for fraudsters to ‘phish’ for personal information. Posing as reputable companies, they send fake offers or direct messages asking people to share sensitive details on fraudulent websites.
The Financial Sector Conduct Authority (FSCA) recently warned of a 30% increase in these phishing attempts on social media, urging policyholders to confirm the legitimacy of messages by checking their insurer’s verified page or contacting them directly.
Deepfake technology for impersonation
Fraudsters are now using deepfake technology to impersonate insurance agents with AI-generated voice and video calls. This tactic has started to appear in South Africa, and can make fake interactions appear even more authentic.
If a call or video chat feels suspicious, it’s always a good idea to confirm the agent’s identity by calling your insurer back through an official contact number.
Steps to protect yourself
Consider the actions below to protect yourself:
- Always verify identity: When contacted by someone claiming to represent your insurance provider, ask for their name, role, and a direct contact number. Call the official line of your insurance provider to confirm their identity, especially if you did not initiate the contact.
- Stay updated on scams: Fraud tactics are constantly evolving. Many insurers provide updates on new types of fraud on their websites. Reviewing these resources regularly will help you spot potential scams.
- Report suspicious activity: If you encounter potential fraud, report it to your insurer immediately. Most major insurance providers, along with SAICB, have dedicated hotlines for fraud reporting. This helps not only protect you, but also prevent similar fraud attempts against others.
Fraud Awareness Week serves as a reminder that being vigilant and informed is essential in today’s world. By understanding common tactics used by fraudsters, and taking preventive measures, you can avoid falling victim to insurance fraud. Remember: when in doubt, verify with your insurer directly.
Melissa Rossouw, senior manager: risk management, Assupol.
