Third of insurance claims fraudulent

Adding an extra iPhone to an insurance claim, not disclosing the real value of a stolen item or staging one's own house robbery are some of the ways people try to score insurance payouts.

Those found guilty of doing so not only stand to lose their policies and battle to get insured again, but they may also face jail time.

And the innocent pay too - through increased monthly premiums and their legitimate claims being more closely scrutinised.

According to the South African Insurance Crime Bureau, 30% of insurance claims are estimated to be fraudulent.

Claims in South Africa for 2013 are projected at R50-billion - and roughly R15-billion of them are estimated to be fraudulent.

Helen du Toit, head of audit and forensics at Santam, said that some viewed inflating claims as "socially acceptable" and "not as serious as other crimes".

But, she said, the consequences could be severe, including "contractual and criminal repercussions".

This was the case for Durban resident Powankumar Harikasun, who was recently ordered by the High Court in Durban to pay punitive legal costs after he lied about an insurance claim. Not only was his claim dismissed, but Harikasun now faces the possibility of being charged criminally.

At issue in Harikasun's claim was a cellphone he valued at R4500 that was stolen when his home was burgled. The insurance company refused to settle his claim, disputing the robbery and accusing him of misrepresentation, and Harikasun sued the insurer to force it to pay.

But his plan backfired when Judge Mohini Moodley found Harikasun to be a liar who drew his daughter and cousin into a "web of lies to pursue his claim".

Evidence showed that the phone was water-damaged and "valueless" at the time of the claim.

The court ruled that the insurance company did not have to cough up - and Harikasun had to pay its legal costs.

In her ruling, Moodley said: "The proliferation of insurance fraud is undoubtedly a serious offence which has adverse repercussions not only for the insurer and the insurance industry ... but also for the public in the form of increased premiums and the scrutiny genuine claims are subjected to."

Michiel Nel, executive director at the South African Insurance Crime Bureau, said "pressure, opportunity and rationalisation" contributed to insurance fraud, together with a "sense of entitlement" among those who feel they should get something in return for paying their insurance premiums.