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Please note: This brochure is available in English and Zulu
Alternatively you can also email us at [email protected] and we'll gladly post you a copy.
Please note: This brochure is available in English and Zulu
THE INSURED MUST PROVIDE TRUE AND COMPLETE INFORMATION ABOUT THE LOSS WHEN CLAIMING
Honesty is the best insurance policy. Blatantly lying or omitting the truth when claiming puts you on a slippery slope. If you get caught committing insurance fraud, you not only could have a claim denied but could experience more extreme consequences.
In supporting the denial of a claim, the Ombudsman for Short-Term Insurance (OSTI) recently relied on an insurer’s warning that a policy may be cancelled if false or incomplete information is supplied in connection with an application for cover or a claim.
The insurer rejected a claim and cancelled the policy on the basis that the insured had intentionally misrepresented and/or provided dishonest information concerning an engagement ring and computer tablet to receive a benefit.
The insurer submitted that the discrepancies in the replacement price and valuation of the engagement ring made it impossible to validate the claim.
It added that, given the value of the ring, it found it peculiar that the insured had not specified it in the policy. Concerning the tablet, the insurer said that the insured was claiming for the same device which was stolen, blacklisted, and last used in March 2016.
The insured was dissatisfied with the rejection of his claim and approached the OSTI for assistance on the ground that the insurer had not proven that his claim was not valid. The insured sought to set aside the rejection and to compel the insurer to remove its record of the cancellation of his policy based on fraud or dishonesty.
Senior Assistant Ombudsman, Ayanda Mazwi, found that the discrepancies concerning the engagement ring and the tablet reasonably indicated that the insured claimed for items lost in previous incidents.
She said that the policy wording also had an exclusion which stated that the value of jewellery may not exceed one-third of the sum insured. The sum insured in terms of the schedule was R302 500.
According to the insured’s submissions, the total value of jewellery items stolen in this incident alone, was around R200 000, exceeding the one-third limit. Furthermore, on its alleged value, the engagement ring would fall within the locked safe warranty.
“After reviewing the policy documents, we also noted that all jewellery and watches per item, pair or set that exceed R20 000 per item in value, which are not specified under the portable possessions section, must be kept in a locked safe when not in use. The warranty further stated that ‘In the event of a claim, there must be visible, forcible and violent entry to the safe’,” said Mazwi.
“These arguments were not put forward by the insurer as grounds for declining liability. The terms and conditions of the cover also placed a contractual obligation on the insured to give the insurer true, correct, and complete information concerning the claim,” Mazwi added.
She explained that the purpose of this obligation is to allow the insurer to establish the facts surrounding the loss and to determine its liability for the claim. The assessment findings herein pointed out material discrepancies on this claim.
“When discrepancies are found during the validation process, it demonstrates that the insured has not been truthful and/or upfront in his submissions and prejudices the insurer’s right to validate the claim. The policy also contains a forfeiture clause that entitles the insurer to reject the entire claim and cancel the policy retrospectively where there is evidence of dishonesty or that the quantum of the claim has been inflated.”
The Ombudsman found that the insured did not provide the insurer with conclusive evidence of the alleged replacement or ownership of the items in dispute at the time of the loss.
“Essentially, the credibility of the insured’s claim is in question. Issues concerning the engagement ring and tablet were irreconcilable. The valuation in respect of the replacement ring was conducted after the loss. This evidence must, therefore, be reviewed under a rigorous standard. The insured’s email was not sufficient evidence on which to accept the valuation certificate without the insured’s proof of purchase, the repairs, and an explanation of the significant discrepancy in the value of the ring. In the same regard, the replacement of the tablet was not confirmed by any evidence and the issues concerning its blacklisting have not been cleared.”
When assessing the merits of the review, the Ombudsmen found that this matter had the hallmarks of a dispute which cannot be resolved in this forum.
“Against this background, the unanimous decision of the escalation committee is that this complaint is not capable of a resolution in this office and is better suited for adjudication in a civil court as envisaged in clauses 5.1 and 7.3 of OSTI’s Terms of Reference,” Mazwi concluded.
Ends.
About the Ombudsman for Short-Term Insurance
The Ombudsman for Short-term Insurance (OSTI) is an independent, non-profit industry ombud scheme. Short-term insurance includes: motor, house owners (buildings), householders (contents), cell phone, travel, disability and credit protection insurance, and commercial insurance for small businesses and sole proprietors. OSTI’s mandate is to provide the insuring public and the short-term insurance industry with a free, efficient and fair dispute resolution mechanism through an alternative dispute resolution process, applying the law and principles of fairness and equity. OSTI is not a court of law. It examines the information and evidence placed before it by the parties to a dispute and makes recommendations that are guided by the legal position and principles of fairness and equity. In rare instances where required, OSTI may make rulings. It does not, nor is it empowered to, procure evidence or witnesses, or investigate a complaint. OSTI, it must be stressed, operates independently of both the Financial Sector Conduct Authority and the Prudential Authority in its adjudication and dispute resolution process.
Issued by:
Meropa Communications
For interviews contact:
Lichelle Govender
082 958 4722
On behalf of:
The Ombudsman for Short Term Insurance
1st Floor, Block A
1 Sturdee Avenue
Rosebank
Johannesburg
South Africa
2196
Office Tel: +27 11 726 8900
Short-term insurance contracts operate on good faith and it is the insured’s responsibility to disclose all material facts that may reasonably be expected to enable the insurer to properly assess the risk...
The policy provided that insured valuables that are governed by the “close personal custody and control requirement”, in it means that the insured property shall be “held by, worn or attached to the insured at all times whilst in transit.”...
Please download the OSTI Press Release regarding the COVID-19 Pandemic below.
The insurance industry will have a single Ombudsman from 1 January 2020. He is retired Judge, Mr Justice Ron McLaren who brings with him a wealth of judicial experience and knowledge in dealing with and resolving insurance disputes.
Download the full press release below.
"Always keeping your car in good nick and regularly serviced could well be to your advantage in the event that an insurer disputes a claim on the basis that the vehicle was in an unroadworthy state.
The Ombudsman for Short-Term Insurance recently ruled in favour of an insured who was able to produce proof that his vehicle had been serviced three days before it was in an accident.
In his Details of Complaint, the insured said his vehicle hit the rear side of a taxi that was stationary, had no hazard lights and no triangle to warn that it was stopped.
“Upon realising that the taxi was not moving, I tried to move to the next lane. An oncoming vehicle could not make way for me to overtake the taxi which then resulted in me hitting the rear side of the taxi,” said the insured.
The insurer had rejected the claim based on the assessor’s report which stated that the rear tyres were smooth, thereby rendering the vehicle unroadworthy.
The insurer said that the assessor had inspected the tyres and found that both rear tyres had excessive wear. The insurer pronounced the vehicle unroadworthy at the time of the accident and concluded that the poor condition of the tyres had directly contributed to the loss.
The insured said that the vehicle was taken for a service three days prior to the accident and the tyres were found to be in a roadworthy condition.
In the ruling, the Ombudsman said that the insurer had failed to prove that the unroadworthy tyres had caused the accident and recommended to the insurer that it settle the claim on the grounds that, as the insurer was relying on an exclusion, it had to prove on a balance of probabilities that the condition of the tyres was material to the cause of the accident, which it had failed to do.
“The insurer had not demonstrated that, if the insured had braked and the tyres were in a good condition, then the insured would have been able to avoid the accident,” said Senior Assistant Ombudsman, Darpana Harkison.
The Ombudsman considered the insurer’s findings and noted that the findings did not relate specifically to the circumstances of the insured’s accident in that they were based on generalised conclusions drawn by other experts based on other specific sets of circumstances. The insurer’s expert did not take into account the fact that the insured had been faced with and reacted to a sudden emergency.
Referring to the clause that the insurer relied on to reject the claim, the Ombudsman said: “This clause requires that the insured take steps to maintain the vehicle and considering that the vehicle was taken in for a service three days prior to the accident, this rejection reason cannot be upheld.
“In our view the insurer’s failure to prove that the unroadworthy tyres were the cause of the accident leads to the inevitable conclusion that it failed to discharge its onus of proof in relation to the exclusion being relied on in substantiation of its rejection of the claim.”
The insurer abided by the ruling and settled the claim."
Maintaining a vehicle can save a claim from being rejected (fanews.co.za)
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The offices of the Ombudsman for Short-term Insurance (OSTI) and Long-term Insurance (OLTI) hosted a joint Consumer Workshop on 26 August 2021. The panel discussed:
For further information, please email [email protected] (Short-term Insurance) or [email protected] (Long-term Insurance). Media enquiries may be emailed to [email protected]
A training workshop presented by Senior Assistant Ombudsman, Mr. Peter Nkhuna, for the Insurance Institute of South Africa (IISA) on 28 July 2021 regarding OSTI's investigation and decision making process, particularly the application of fairness and equity.
The Ombudsman for Long-term Insurance (OLTI) and the Ombudsman for Short-Term Insurance (OSTI) recently had what it calls a “soft amalgamation” and have collaborated under the banner of “The Insurance Ombudsman” to bring you this production, which covers hints on funeral policies, credit life insurance, and case studies on motor insurance and business interruption cover. The production explains who or what is the ombudsman, what it does, and how it is done. It also reveals the ombudsman in action.
The Ombudsman for Long-term Insurance (OLTI) and the Ombudsman for Short-Term Insurance (OSTI) recently had what it calls a “soft amalgamation” and have collaborated under the banner of “The Insurance Ombudsman” to bring you this production, which covers hints on funeral policies, credit life insurance, and case studies on motor insurance and business interruption cover. The production explains who or what is the ombudsman, what it does, and how it is done. It also reveals the ombudsman in action.
"When times are hard and consumers find themselves in a tight financial situation, and they are forced to cut down, research shows that the first things consumers cut, to free up funds, is insurance. But is it a clever move?"
Download the interview below.
Download the interview below.
Each matter is dealt with on its own merits and no precedent is created by the findings in these matters. The case-studies are intended to provide guidance and insight into the manner in which this office deals with complaints.
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