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Insurance Fraud

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Insurance fraud is any act committed with the intent to fraudulently obtain payment from an insurer.

Insurance fraud has been in existence  since the start of insurance as a commercial business. Fraudulent claims account for a significant portion of all claims received by insurers, and cost billions annually.

Insurance fraud occurs in all areas of insurance, like house hold insurance,medical insurance and auto insurance. Insurance related crimes also range in severity, from slightly exaggerating claims to deliberately causing accidents or damage.  Insurance fraud poses a big problem, and governments and other insurance companies are making efforts to deter such activities.

How does insurance fraud affect you ?

Quite simply, all the honest insured people will pay more for their insurance premiums. So if you suspect or know of someone who commits insurance fraud you are helping yourself and others by reporting this. If there was no insurance fraud our insurance premiums would be lower.

Pay as you Drive

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Auto Insurance is partly based on the average kilometers insured people drive. But isn’t that unfair if you drive far less as the average person because you might be a stay at home mum, your work from home etc. There can be many reasons why you drive less as the average person. Why should you pay high premiums for your auto insurance if your car is standing still most of the time. Obvious you are at a lower risk to be involved in a accident as the business person who drives 30000 Km a Year.

Here is where Pay as you Drive comes into play. Hollard’s Pay as you drive is the first personalized auto insurance in South Africa where your auto insurance premiums are directly related to the number of kilometers you drive.

Pay As You Drive – Personalised auto insurance, where auto insurance premiums are based on your monthly mileage! Click Here to visit hollard for a quote

How do insurance companies make money

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Insurance companies earn money in two ways.

  • Through underwriting.

Underwriting is the  process through which insurance companies select what risks to insure and decide how much insurance premium to charge for insuring those risks

  • Investing the premiums

Through carefully investing the received insurance premiums in high return investments they will be able to earn money on the invested insurance premiums

The most difficult aspect of the insurance business is the underwriting of polices. Based on a wide set of available data, insurance companies  predict the likelihood that a claim will be made against their insurance polices. Insurance companies  price products according to the likelihood of claims.

 At the end of the insurance, the amount of insurance premium collected minus the amount paid out in claims is the insurance companies  underwriting profit.

Insurance companies  currently make the most money from their auto insurance line of business. Generally better statistics are available on auto insurance claims  and underwriting on this line of business has benefited greatly from advances in computing technology.