The number of fraudulent and dishonest claims detected by the life insurance industry has decreased, but the total value of those claims increased, the Association for Savings and Investment SA said on Wednesday.

A total of 1382 claims, worth R375.9-million, were detected in 2008, whereas 1512 fraudulent and dishonest claims, worth R278.9-million, were detected in 2007, deputy chief executive officer Peter Dempsey said in a statement.

The value of the claims was the highest since the industry started collecting claims fraud and non-disclosure statistics in 2003.

"While the industry has been successful in clamping down on fraud, the value of attempted cases has increased."

However, the fraudulent and dishonest claims recorded last year represented less than one percent of total claims paid in 2008.

"By far the majority of claims submitted are honest and legitimate and are therefore honoured by life companies."

The life insurance industry paid beneficiaries, policy holders and pension fund members more than R180.6-billion in claims last year.

Cases of fraud involving intermediaries decreased from 38 to 34 between 2007 and 2008. The total value of such cases however increased from R6.1-million to R10.2-million over the same period.

Dempsey ascribed the decrease in the number of cases to tougher legislation that regulated intermediaries and their advice, as well as to increased consumer vigilance and early detection methods applied by the industry.

The highest number of fraudulent cases in 2008 were submitted in KwaZulu-Natal (42 percent), followed by Gauteng (23 percent) and the Eastern Cape (12 percent).

Dempsey said if life companies did not try to prevent claims fraud it would ultimately force companies to recover losses from customers.

The five most common categories of insurance fraud were fraudulent and dishonest claims, material non-disclosure and misrepresentation, fraudulent documentation, beneficiary and syndicate fraud and fraud involving intermediaries.

Misrepresentation involved policyholders not fully disclosing the seriousness of medical or other conditions because they could be charged a higher premium.

The number of misrepresentation cases decreased from 208 in 2007 to 89 last year. Their value also decreased from R69-million to R49-million.

"It is much better to be completely honest about a medical condition and pay the appropriate premium than to run the risk of having a claim declined when you die or become disabled," Dempsey said.

Material non-disclosure involved applicants not divulging information about medical history, state of health, family medical history, lifestyle and financial status.

Material non-disclosure cases (884) amounted to R244.6-million in 2008, up from R127-million (833 cases) reported in 2007.

In 2008 forensic departments uncovered 311 claims based on fraudulent documentation amounting to R60.1-million.

In 2007 there were 385 such cases worth R74.8-million.

The life industry reported 64 cases involving beneficiary and syndicate fraud totalling over R12-million in 2008. In 2007 there were 48 such cases amounting to R2-million.