South African Insurance Crime Bureau chief executive Garth de Klerk told the Weekend Argus that last week the bureau had received a claim which had already been processed.
“The person had died last year April and the claim was processed, and then we got a claim again for the same person. Renting a corpse is a problem as we have many cadavers moved from one morgue to another,” said De Klerk.
The most common modus operandi involves death certificates being bought and doctors signing off without seeing a body, for a fee.
The other is where a body is moved around by different syndicates to various morgues and claims are made to insurers.
“Sometimes syndicates would burn, leave the body in water or run it over badly so it is not identifiable, or take out a policy for a person and then have them murdered,” said De Klerk.
To safeguard against fraudulent activity the bureau will be rolling out a system which uses fingerprint technology to verify the identities of corpses.
Last month, the Association for Savings and Investments SA (Asisa) indicated in a report that South African life insurance companies had discovered 3708 fraudulent claims in the amount of R1.06 billion in 2018.
In 2017, life insurers detected 5026 fraudulent and dishonest claims worth R1.13bn.
Donovan Herman, convener of the Asisa claims standing committee, said life insurers owed it to honest policyholders to protect the integrity of the long-term insurance model by preventing fraud and dishonesty.
“If we allow fraudulent and dishonest claims, honest policyholders will ultimately end up footing the bill through higher premiums.”
He added in the report that while life insurers were frequently accused of trying to avoid paying claims, the numbers told a different story.
In 2018, life insurers paid 99.3% of claims made against fully underwritten individual life policies alone, to the value of R15.1bn.
Herman said most fraudulent activities in 2018 had taken place in the funeral insurance space.
Reports from the forensic departments of life insurers showed that the buying and renting of dead bodies to obtain fraudulent death certificates was a popular modus operandi.
Life insurers rejected 1915 funeral claims worth about R176.4 million in 2018 as 1127 were found to involve fraudulent documentation.
“Another 156 fraudulent claims showed syndicate involvement, and in seven cases, beneficiaries were found to have caused the death of the policyholder,” read in the report.
Herman said funeral policies did not require blood tests and medical examinations and were designed to pay out quickly and without hassle when an insured family member died.
In 2018, long-term insurers declined 698 irregular death claims worth R417.3m. Fraud was detected in 481 cases, while seven cases involved syndicate fraud. About 195 claims were declined due to misrepresentation and/or material non-disclosure.
Henry Shields, a specialist personal injury lawyer, told the Weekend Argus that renting a corpse was not a new phenomenon. He recalled an incident where an illiterate client was sent verification forms by an insurer.
Fingerprints were taken and sent back; however, it was found that the client had died several years prior and the family had been collecting his money each month.
“There is no difference between burning a factory or burning a body to claim from an insurer. In a perfect world, there would be proper protocols and methods. This type of fraud is either done through inefficiency or corruption.”
Shields said bodies were bought, and sometimes a body was not even needed to claim death. “In some cases, a person may fake their death by drowning or accident. People may even claim next of kin with a fake marriage certificate,” said Shields.
Discovery, Old Mutual and Sanlam did not comment when approached for this story.