Insurers face challenge to halt hospital cash plan fraud
IF THE abuse of hospital cash plans continues to escalate, life insurers may have to take tough measures to ensure the financial viability of these products. Association for Savings and Investment SA CEO Peter Dempsey said on Tuesday that the measures could include raising premiums, introducing standard cancellation clauses and even stopping hospital cash plans completely. The association’s statistics show hospital cash plan fraud is a growing problem in South Africa.
Long-term Insurance Ombudsman Judge Brian Galgut said in his recently released annual report that many of the excessive hospital cash plan claims appeared to be part of an organised scam. The annual report makes reference to a specific case where a policyholder had claimed for 10 hospital stays totalling 71 days over a period of two years.
The reasons included flu and other medical conditions that do not usually need a patient to be admitted to hospital. According to a review of the South African hospital cash plan market commissioned last year by the FinMark Trust, there are between 1-million and 1.5-million hospital cash plans in effect, providing cover to 2.4-million people.
The review found the hospital cash plan market was growing rapidly with about 50,000 policies sold monthly.... Read the full, comprehensive news article and discuss at Business Day