South African insurers are facing growing concern over suspected “murder-for-money” cases, where beneficiaries are accused of being involved in policyholders’ deaths to access insurance payouts.
BusinessTech reported that the National Financial Ombud Scheme (NFO) has raised the alarm over the trend and is calling for stronger safeguards in the insurance industry.
Official figures from the Association for Savings and Investment South Africa (ASISA) show that insurers detected 38 murder-for-money cases in 2024, compared with 14 in 2023.
Funeral policies involved in most cases
ASISA said 36 of the 38 cases involved funeral policies, while two involved life policies.
Insurers prevented about R6.6 million in payouts connected to the cases, while actual losses amounted to roughly R380,000.
The organisation has established working groups to find ways of reducing the risk of criminals taking out funeral policies for financial gain while keeping the products accessible to legitimate customers.
NFO wants stronger consent rules
The NFO has proposed that insurers should obtain proof of informed consent from the person whose life is being insured before issuing certain policies.
Lead Ombud for Life Insurance Denise Gabriels said this could improve transparency, strengthen consumer protection and reduce opportunities for fraud.
BusinessTech reported that the NFO has also called on the Financial Sector Conduct Authority to consider introducing consistent conduct standards around informed consent.
Criminal investigations can delay payouts
The NFO says it generally will not investigate a beneficiary’s complaint while that person is facing an active criminal investigation or court proceedings linked to the insured person’s death.
However, it warned that legitimate claims should not be delayed indefinitely.
If an investigation makes little progress, or police confirm that a beneficiary is not a suspect, the insurer may need to assess the claim using the available evidence and policy terms.
The NFO also stressed that allegations alone do not prove wrongdoing and that each dispute must be considered on its own facts.
ASISA’s broader figures show fraudulent and dishonest life insurance claims increased from 4,130 in 2023 to 5,505 in 2024, highlighting the wider pressure insurers face from fraud.