A criminological inquiry into life insurance fraud in KwaZulu-Natal: an exploratory study.
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Date
2023
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Abstract
Life insurance is a financial safeguard designed to provide individuals and families with a sense of
security, assuring them that their loved ones will be financially protected in the event of an unforeseen
circumstance. However, there exists a dark side to this industry the realm of life insurance fraud,
which has become vulnerable to the intricate web of fraudulent activities.
The reality is that innocent people are killed solely to cash in on life insurance money. Life insurance
fraud has become pervasive and is on the upsurge within the insurance sector in South Africa,
particularly in the province of KwaZulu-Natal. with a major financial impact on insurance companies
and policyholders. While life insurance fraud is not a new problem in South Africa, it has gained
increased media attention in recent years, highlighting its importance as a critical subject. However,
very little data on this phenomenon is available in local and international literature. Hence, this study
aimed to contribute to this knowledge by exploring the Modus Operandi used by policyholders or
beneficiaries to commit life insurance, the motivating factors and the detection and prevention
strategies employed by insurance companies, using those who have first-hand experience and
knowledge.
To ensure that the aim of this study was achieved, a qualitative research design was utilised which
assisted the researcher in focusing on the criminological inquiry of life insurance fraud in KwaZulu-
Natal. Data collection was achieved employing semi-structured interviews and key informant
interviews (KIIs) that involved a total of twenty (20) participants comprising of Directorate for
Priority Crime Investigation (DPCI) members and Assupol forensics investigators. A set of predetermined
questions were used, these enabled the researcher to explore themes and elicit data that
focused on achieving the objectives of the study. The fraud triangle and routine activities theory were
used as theories in support of this study.
The findings of the study revealed that life insurance fraud takes on various forms, with policyholders
and beneficiaries engaging in deceptive practices such as faking their deaths or orchestrating the
death of others to secure a pay-out. The study uncovered that the occurrence of death in rural areas,
similar to other settings, can be vulnerable to life insurance fraud when individuals or beneficiaries
attempt to deceitfully claim life insurance benefits for someone who passed away months or even
years ago. Additionally, the study uncovered a chilling trend in the manipulative exploitation of life
insurance policies through the use of hired dead bodies. This modus operando goes beyond mere
deception, delving into the horrid realm of utilising actual deceased individuals to fabricate deaths and illegally claim insurance benefits. In essence, the findings depicted that life insurance fraud costs
the lives of innocent people, as people are murdered for the sole purpose of obtaining a life insurance
pay-out.
The findings also revealed that the insurance sector employs various strategies; however, challenges
that were exposed include a lack of cooperation from South African Police Services officials, a basic
understanding deficit regarding what constitutes life insurance fraud, limited public awareness, and
reluctance of informants to cooperate in criminal investigations. Moreover, the research revealed that
the Directorate for Priority Crime Investigation (DPCI) tends to respond reactively rather than
proactively in cases of life insurance fraud. Consequently, the responsibility for proactivity is
perceived to lie with the insurance industry. This underscores the argument for enhanced
collaboration between the South African Police Services and the insurance industry to formulate
strategies to proactively address the rising trend of life insurance fraud in the study area.
Description
Doctoral Degree. University of KwaZulu-Natal, Durban.