Consumers are coming under pressure from higher interest rates and inflation. Content and car insurance companies in South Africa are noticing a large increase in the number of fraudulent insurance claims.
Car insurance companies claim that up to 10 percent of all claims are fraudulent. This causes insurance cost to increase. Insurance companies will transfer the increased cost that they suffer from losses to consumers. Unfortunately it is the honest consumer that will bear the brunt of the higher premiums from insurance companies. Insurance companies need to recoup their losses from higher insurance premiums.
Government bodies will have to look at helping the car insurance companies to curb these crimes before insurance inflation spirals out of control. Insurance premiums are high as it is and the consumer will find it difficult to absorb additional cost. Dedicated crime prevention units need to be establish to target fraudulent claims.
Fraudsters are violating the rights of the consumer and corrupting the basic communal principle governing insurance practices. Losses of the few are made good (indemnified) through the contributions of the many. Criminals in the insurance industry are reported to the relevant law enforcement authorities and prosecuted.
The purpose of insurance is to create structures where the masses have access to sound recourse to protect their wealth and livelihoods against the consequences of unforeseen events. Insurance criminals are creating a corrupt situation where both the car insurer and the consumer, and society at large will suffer harm.
The current economic pressures have caused considerable financial difficulty upon the consumer. Any prevention on this crime will help consumer from higher insurance premiums. Fighting fraudulent claims is a difficult task. Government and Insurance companies have a huge task ahead to stop fraudsters.
The cost to fight fraudulent claims will be high, but it will be to the benefit of everyone. Billions of Dollars are lost every year to fraudulent claims and needs to be placed in check so that the inflation on insurance premiums doesn’t increase out of control.