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Fraud and Polygraph testing

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Fraud and Polygraph testing

Fraud is one of the greatest problems facing the South African Insurance Industry. All too many claims include some element of fraud, varying from exaggeration of the amount claimable to outright falsity of the alleged facts relied on.

Insurance contracts require good faith on the part of both parties.  At all times you should be open and honest with your insurer and not misrepresent or distort facts.  Remember that fraud is a criminal offence and can have serious consequences.  The Ombudsman will not assist you where your claim is fraudulent although if the value of a genuine claim has been increased out of a believe that the insurer will attempt to “beat me down” in respect of the value of any claim, the Ombudsman’s office may be able to assist you in persuading the insurer to pay the genuine value of your claim.  However you will have to convince the Ombudsman that you did not act with the intention to defraud the insurer.  The Ombudsman may also apply the provisions of the Conventional Penalties Act and reduce the value of your claim or impose a penalty upon you as a sign of disapproval for your conduct.

If you engage in fraudulent conduct or use fraudulent means or devices to obtain any benefit not due to you, your policy is also likely to be cancelled and you may not be able to obtain insurance cover in the future.  DO NOT ENGAGE IN FRAUD AND REMEMBER THAT HONESTY IS THE BEST POLICY.

Unfortunately, this problem sometimes causes the innocent to suffer with the guilty. Claims are ever more minutely scrutinised, ever more closely examined, ever more treated with suspicion, and the genuine claimant resents all this.

Recently, one of the ways in which some Insurers are trying to solve the problem is by making use of the polygraph or "lie detector" and asking or compelling the Insured to submit to such a test. The Policy Protection Rules provide that no Insurer can compel an Insured to undergo a Polygraph or Lie Detector test. The Insured may however, willingly undergo such a test.

If the Insured agrees to undergo the test then he/she has the right to have a legal representative or any other person present. The Insured is also entitled to a recording of the questions put and the answers given.

If you voluntarily undergo the Polygraph or Lie Detector test and fail it, the Insurer is still not entitled to repudiate the Policy based on such failure.

In Summary

  1. Take legal advice before making a decision, especially if the claim is substantial and you have reason to believe that the Insurers suspect misrepresentation or fraud.
  2. Do not go to the test alone. Obtain a recording as suggested.
  3. If, after you have undergone the test, Insurers repudiate the claim, you are entitled to consult a lawyer, or make a formal application to the Ombudsman to investigate the matter if you maintain that the repudiation was not justified.