Beware this scam in South Africa warns insurer

Beware this scam in South Africa warns insurer

September 12, 2021 0 By administrator

After recently splashing out on your dream car, you receive a call from the dealership stating that the model is being recalled to fix a defect. The manufacturer will bear the cost and it will be arranged for the vehicle to be collected.

This is inconvenient, but you agree and hand your vehicle over to the tow truck driver when he arrives.

Having heard nothing for a few days, you call the agent to follow up on the progress with your car, who informs you there is no recall and they never received the car.

This is when you realise you’ve been scammed. You are the victim of “theft under false pretence”. Even worse, your insurance policy wording excludes cover for loss where you release your insured property (your car) to a scammer without confirming with the manufacturer first.

So, what do you do now?

Report your car as stolen to the police. Then, immediately contact your insurer and explain what happened.

The chances may be slim that you’ll recover your car at this point, but your insurer employs investigators equipped with tools such as intelligent data systems and automatic number plate recognition for vehicle sightings to trace stolen vehicles.

Statistics worldwide estimate fraud connected to short-term insurance claims to be as high as 20%, said Dennis Potgieter, Hollard Insure national manager: loss verification. Detecting fraud before claims are paid is a priority for insurers.

It is vital that every insurer has a loss verification division, or uses an external partner, to conduct validations and verifications of losses and incidents, and detect fraudulent claims before they are paid out, said Potgieter.

This protects not only the insurer’s own interests in items that are insured, but also its loyal clients, and limits the risk of people having to claim, he adds. “If we weren’t there, insurance companies would pay out on those claims, leading to increased premiums. We’re making sure we protect our clients who have legitimate claims from fraudsters and crime.”

Such fraudsters often belong to syndicates committing theft under false pretence. Common examples of this are when people are scammed when selling their cars over the internet or by crooks posing as technicians for vehicle-tracking companies, who then make off with the unsuspecting owner’s car.

But not all insurance fraud is linked to syndicates. Think about the person who inflates their legitimate claim by adding a few items; the person who, after claiming for a lost cellphone and receiving a replacement handset, finds and keeps (or sells) the misplaced item; and the person who allows their son to drive their car but pretends they were the driver when there’s an accident in order to avoid paying a big excess.

The consequences of such actions can be serious – the person can be exposed and their policy cancelled and/or they can be criminally charged, warned Potgieter.

Fighting fraud with artificial intelligence

A 2020 report on insurance fraud by FRISS, which…

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