Insurance scams: avoid becoming a victim

Insurance fraud is rising in South Africa and the dangers are real. Opportunists have become ever savvier at lifting your hard-earned cash. Besides not having insurance when you need it, a fake policy can also create a lapse in legitimate coverage. This leads to higher insurance premiums. Never fear. As insurance professionals, De Lucia Insurance Brokers and Financial Advisors arms you with the information you need to stay safe. 

COVID-19 sees a rise in insurance scams

COVID-19 hasn't just impacted the property market. Times are tough and people are under financial pressure. It's in this landscape that insurance fraudsters are becoming more active. They're preying on people's emotions and desperation by providing enticing policies that appear legitimate on the surface. You need to exercise constant vigilance as scams flood the market. 

Recent insurance scam incident

IOL reported that an email scam has targeted law firms to defraud them of their funds. Hackers have made contact, claiming to be clients or members of legal insurance or trust funds. They then request a refund or payment of funds. What is concerning is that insurance scammers are not discriminating between the rich and poor, individuals or businesses, or specific parts of the country. It's up to everyone to educate themselves on the warning signs of insurance fraud. 

Insurance scams to look out for

Signing up for an insurance policy can often be a complicated process. Insurance fraudsters know this and take advantage of people's lack of financial experience. Here are some red flags you should always watch out for. 

• Fake policies: Scammers may offer policies at costs that are significantly lower than competitors' prices. They become difficult to reach once they are paid for the policy. 

• Dodgy deals: Be wary of legitimate companies who try to sell you non-insurance products that are marketed like real insurance. 

• Premium fraud: A broker presents themselves as part of a legitimate business. They pocket your premiums on behalf of the business. You continue thinking your premiums are paid while the insurance company has no record of your policy and may even cancel it. These are common with funeral policies that only kick in after a loved one's passing. 

• Unlicensed brokers: These brokers present themselves as professionals within the industry and charge for insurance advice despite not having the proper credentials.

By doing your homework and taking the right steps, you can avoid falling for an unsavoury scheme. 

Protect yourself from insurance scams

If you're considering taking on a funeral cover, vehicle insurance, or related financial product, do your homework. 

• Research your policy options: Shop around and source different quotes. Be thorough when going through the fine print and ask as many questions as possible. 

• Watch out for red flags: Professional brokers abide by strict standards in the service they provide. They don't use comparison quotes websites. They have their own website and clear lines of communication. They don't accept payment in cash only. Their email addresses are legitimate - they don't use Gmail or Yahoo, for example. 

• Google your broker: Your broker may be linked to a reputable company but you shouldn't automatically take that at face value. If you feel sceptical, contact the business directly for more information. 

• Report dubious agencies: If something doesn't feel right, it usually isn't. You have lots of avenues to combat fraud including the Southern African Fraud Prevention Service. They can be emailed at protection@safps.org.za.

Partner with a licensed insurance broker

By working closely with legitimate insurance sellers, you can rest assured. A good insurance broker will ensure you get the best possible deal and make the claims process a simple one. By law, your broker or financial advisor will need to be licensed by the Financial Services Board (FSB) either as a provider or as a representative of a provider. You can search for a specific FSP and verify them by their FSP number or name here: www.fsca.co.za/Fais/Search_FSP.htm.

De Lucia Insurance Brokers and Financial Advisors (an authorised financial services provider: FSP 4186) are respected in the industry for our professional service. Make contact today or call Tracey-Lee Jordaan directly on 011 975 5911.

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