Insurance Fraud Costs South African Industry Millions Each Year

December 27 - Auto & General Insurance recently noted that insurance fraud costs the South African industry literally millions of Rands every single year.

A recent survey run in the United Kingdom shows that two in five drivers have lied to their insurance company in order to obtain cheaper car insurance.

"The survey results showed that drivers were most likely to falsify information about their annual mileage (14%), where they keep their car (8%), the value of the car (7%) and about named drivers who most likely will never actually drive the specified car," said Angelo Haggiyannes, the director of Auto & General.

Men are more likely to commit insurance fraud, with 46% of men acknowledging that they'd lie, compared to 32% of women.

"Not only is insurance fraud malicious, it has devastating consequences on the industry at large," said Haggiyannes. "What makes insurance fraud so criminal is that it's the innocent and truthful consumer who lands up footing the bill or subsidizing fraudulent claims in the form of increased premiums."

He said that by not being truthful about their circumstances, drivers are essentially gambling with invalidating their cover altogether.

Should this happen, drivers are solely responsible for any damages caused to their cars.

"Moreover, insurance fraud can result in a criminal conviction with serious repercussions for the perpetrator," he said.

Essentially, there are three don'ts that policyholders should follow:

• Don't lie about where you park your car.
• Don't lie about how the vehicle is used.
• Don't lie about the drivers who will get behind the wheel of the car.