The National Financial Ombud Scheme (NFO) has warned that cases where beneficiaries are accused of arranging the death of a policyholder to collect life-insurance payouts have more than doubled in a year. The association that represents insurers, the Association for Savings and Investment South Africa (ASISA), recorded 38 such cases in 2024, compared with 14 in 2023.
These “money for murder” claims involve a beneficiary, the person named to receive the payout, allegedly taking part in, or orchestrating, the death of the insured person. The NFO says the pattern threatens the credibility of the industry and leaves families in limbo.
Denise Gabriels, Lead Ombud of the NFO’s Life Insurance Division, said the scheme will not process a beneficiary’s complaint while a criminal investigation or court case is active. “If a criminal case is opened against a beneficiary, it will not investigate his or her complaint while police investigations or court proceedings remain active,” she explained.
At the same time, Gabriels warned that long-running investigations can leave legitimate claimants without support. The NFO may order an insurer to assess a claim on its merits if the police investigation drags on “unreasonably” or if the beneficiary is cleared. “It would be unjust for insurers and beneficiaries to remain in a state of uncertainty indefinitely while awaiting the outcome of a criminal investigation that shows little progress,” she said.
To address the root of the problem, the NFO is urging the Financial Sector Conduct Authority (FSCA) to introduce a rule that insurers must obtain proof of informed consent, the insured person’s explicit agreement that they are covered, before a policy is issued by a third party. Gabriels argues that a mandatory consent requirement would improve transparency, reduce fraud opportunities and help insurers verify the legitimacy of policies at the start.
While many insurers already have checks for insurable interest, the NFO says industry practice is not uniform. A consistent regulatory framework, it says, would raise standards across the sector and protect consumers. For small business owners, family-run enterprises and ordinary South Africans, the issue matters because life-insurance payouts are often a key part of financial planning. A rise in fraudulent claims could push premiums higher and make it harder for genuine policyholders to obtain cover.
For more on how the NFO’s proposals fit into the broader regulatory picture, see our Regulatory & Policy coverage.
The proposed consent rule is intended to “enhance transparency, strengthen consumer protection, reduce opportunities for fraud and abuse, and assist insurers in verifying the legitimacy of policies at inception,” according to Gabriels. By requiring documented proof that the insured person has given informed consent, insurers would be able to confirm who authorised the cover, the extent of the coverage, and the identity of the policy taker. This measure aims to close a loophole that currently enables third parties to secure policies without the insured’s knowledge.
