Insurance fraud is becoming more frequent, more sophisticated and far more costly - and honest South Africans are paying for it. According to Liezel van der Schyff, manager of the private division at GIB Insurance, there were 13 074 cases of fraud and dishonesty in 2023 alone, a 46% increase from the previous year’s 8 931 cases.
The fraud resulted in losses increasing by 128%, rising from R77.2 million in 2022 to R175.9 million in 2023, according to the Association for Savings and Investment South Africa (ASISA).Van der Schyff said far from "more people trying their luck", the industry was witnessing a definite shift in how fraud is being perpetrated. "It’s more organised, more deliberate and often co-ordinated,” she says. “It’s no longer just individuals inflating a claim. There are syndicates, fake brokers and even inside help in some cases.”
The types of fraud involved vary from seemingly harmless exaggerations to fully fabricated claims, and are wide and deeply damaging. Of concern were the increasing numbers of customers manipulating electronic device claims, often with help from repair shops or friendly IT contacts.“ For example, clients will claim their phones or laptops are irreparably damaged, supported by a manufactured damage report, to secure a brand-new replacement. If the device is discontinued, insurers are often forced to replace it with the closest equivalent – usually a better, newer model, " said van der Schyff. “It’s become a clever way to upgrade your gadgets without paying for it.” Fraudulent claims also included lightning or power surge damage to electronics and roof leak claims, many of which are maintenance-related and excluded from insurance policies.
Insurers have responded by relying more heavily on technology to vet claims, including requiring proof like IMEI numbers and blacklist references for mobile phones, or deploying assessors to physically inspect damage before approving payouts.Innocent and honest people are affected as fraudulent claims result in insurers increasing premiums across categories considered high-risk, including jewellery, electronics and portable tech.“It’s frustrating because the majority of policyholders are honest, but they’re being penalised for the dishonesty of a few,” said van der Schyff.Insurers are also preventing fraud by using strategies that leverage technology, such as predictive analytics and AI-powered systems. These make it harder for fraudulent claims to slip through. Insurers are also sharing data to identify repeat offenders and syndicate activity, while internal forensic departments conduct investigations, sometimes even scanning social media to verify the details of a claim.“If fraud is detected, the consequences are serious. The policy would be cancelled and the client is flagged across insurance industry records,” says van der Schyff. “If they try to take out a new policy elsewhere, they’re legally required to disclose this history and many insurers will decline to cover them.”Advice for policyholders,Van der Schyff said it is easy to stay on the right side of the claims process: be honest, submit accurate information, and notify your insurer of any material changes to your risk profile. Claims can be denied if details like a new address or changes in how a vehicle is used, are omitted, and the policyholder can also be accused of fraud.
Van der Schyff also warned policyholders to beware of scams disguised as insurance communication. Fraudsters often use phishing emails and texts to trick people into clicking malicious links or disclosing sensitive information, she said, adding that people should watch for poor grammar, strange formatting and a sense of urgency as signs of a scam.“The reality is insurance fraud doesn’t just harm companies, but impacts every single policyholder,” said van der Schyff. “We all end up paying the price, either in higher premiums or reduced cover. That’s why early detection, data sharing and client awareness are so critical to keeping the system fair and sustainable.”
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