South Africans are struggling to cope with the high cost of living, with many turning to debt to make ends meet, and now many are committing insurance fraud as an easy way to raise some cash.

This is according to the CEO of the Insurance Crime Bureau, Garth de Klerk, who said that the group had noted an uptick in insurance fraud.

Speaking with eNCA, De Klerk said the cost of living crisis in the country is pushing people to commit fraud that they consider a victimless crime to free up some cash.

He explained while insurance companies are seeing an uptick in claims padding – inflation of the value of the claim – they are also seeing a concerning increase in incidence staging.

“This is quite prevalent in claims for home invasions, where individuals are claiming that their homes were broken into, listing various items of value that were stolen when, in fact, the robbery never took place,” said De Klerk.

What’s worse, he further noted that insurers have experienced an increase in funeral fraud, where people are literally being murdered by their family members for money.

A notable example of this is the case of Rosemary Ndlovu, a convicted serial killer and a former policewoman found guilty of murdering her live-in lover and five of her relatives between 2012 and 2018.

She was found to have taken out life and insurance policies for her targets and collected as much as R1.4 million in payouts after their deaths, reported Times Live.

De Klerk said that as the economic conditions have worsened in South Africa, insurers are seeing these types of claims fraud increase across the income brackets, from poor households right through to high-income earners – although they are more prevalent among those that don’t have a safety net in terms of disposable income.

South Africans are drowning in debt

According to DebtBusters’ second annual Money Stress Tracker, three out of four South Africans feel money stress, which severely affects home and work life and health.

78% of respondents said that they feel money stress, with 94% saying that it affects their home life, 78% their work life and 77% saying it impacts their health.

The report further noted that lower-income earners were the most stressed, while those earning more have high, unsustainable debt levels. Additionally, short-term concerns were the main reason for stress, with half of respondents saying that running out of money before the month-end was their biggest concern.

“We advise consumers not to use more than 30% of their take-home pay on debt repayments. However, 70% of respondents said they spend more than 30%, while 62% of respondents in the two highest income bands we surveyed spend 40% or more of their income on servicing debt. This is too much, especially in a high-interest, high-inflation environment,” said Benay Sager, head of DebtBusters.

Source: BusinessTech