Momentum made headlines when it was reported in the media that the company would not be paying out a claim made after the death of Nathan Ganas who died after being shot in a hijacking.
There was a significant public outcry from clients and consumers with many accusing Momentum of looking for a reason not to pay out a claim. However, the reality of this case was that there was non-disclosure which was brought before the Life Ombud.
Educating the nation
From the public outcry, it is clear the clients and consumers do not necessarily understand the ramifications of non-disclosure.
And although Momentum made a clear attempt to uphold the rejection and use the opportunity to educate consumers about non-disclosure, the pressure they faced was immense and they had to consider reputational damage.
A word from Momentum
News broke, yesterday, that Momentum agreed to pay the claim (and others) and the following press release was issued.
It is clear from market reaction over the last two days that under certain circumstances, current industry practice creates the impression that insurers are looking for reasons not to pay a claim. Momentum is in the business of paying claims and we have therefore taken the criticism to heart. We have created a solution that will pay an amount equal to the death benefit (limited to a maximum of R3 million) in the case of violent crime, regardless of previous medical history. This will apply to all existing as well as future life cover clients.
Key points to take note of:
The guarantee will apply immediately to all our life cover clients and will be applied retrospectively. We are identifying clients who were impacted in this way and we will contact their families to arrange payment. This includes Mrs Ganas.
The importance of full and honest disclosure at application stage cannot be overemphasised.
The only time your health status matters, is when you apply for cover. This is when you need to share all your medical and health information. If your health deteriorates after commencement of the policy, there is no need for you to inform Momentum – your claim will be completely valid if the information provided at the start of the policy was accurate.
With exception of the new guarantee, full disclosure remains non-negotiable to ensure peace of mind.
We care for our clients and always strive to solve for their needs. We hope that this solution illustrates that.
Editor’s Thoughts:
The new solution that Momentum has come up with is innovative and will no doubt disrupt the industry in a good way. But do you think the decision to pay out the Ganas claim was the right decision to make? Please participate in our poll related to this issue. Please also comment below, interact with us on Twitter at @fanews_online or email me your thoughts jonathan@fanews.co.za.
Comments
Added by Vie, 23 Nov 2018Secondly, I would also want to know how they will treat deaths from accidents. I think these should all be included.
Thirdly, what will stop someone who has diliberately withheld medical information and goes to areas where they know there's crime in order for their claim to be accepted.
This might result in unintended quenceqounces. Resulting in high claims experience and high cost of insurance. Report Abuse
Perhaps he is best be advised to first seek advice on the likely consequences hereof. More blatant dishonesty, mpore lying with impunity, more pressure on insurers to pay illegitimate claims such as this one leads to treating ALL current and prospective customers much more UN-fairly. The only possible consequence of over-throwing the well established law like this, is that premiums will rise and more people will find it harder and harder to get life assurance at all.
How about "treating insurers fairly" for a change?
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A contract stay as contract and it is the responsibility of the assured to read through his contract and avail himself of the rules and regulations that accompany it.
This is nothing but emotional blackmail and it is a pity that Momentum has given in to it, in the process placing the intermediary immediately under suspicion of not doing his/her work properly.....that is BS, no proof of that.
Honesty is always the first price...! Report Abuse
The client has some control over their health (ie non smoking and blood test) to qualify for discounts in the health risk premium. However the accidental risk premium is an actuarial number that is not directly related to the clients health or age and should be an automatic payout.
I note that the non underwritten accidental death offering by Momentum is limited only to a direct violent crime. What about a death claim due to a car accident? Report Abuse
Their first decision was legally AND morally correct - and is supported by much case law here and abroad. Report Abuse
And of course the infamous "diabetes" (Q8.4) or "rasied blood sugar" (Q8.5) questions.
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All necessary test should be done from now on. Report Abuse
I think MOM needs to stop using U/W technology and read between the lines as it were and then ask some more questions before issuing cover.
Possibly some good PR comes out of this.
Previous comments from readers are all valid as well,in my opinion .
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No and Yes
No:
Consumers should be aware of the ramifications of non disclosure, misrepresentation and other factors that may affect a risk on ANY type of insurance product. Consumers are partly responsible for high premium rates, in view of the above.
Yes:
1.This was an unusual situation that required a more measured response - the reputational damage affected not only Momentum, it damaged the industry, more especially the sales staff..
2. It should be a lesson to ALL insurers to be particular about underwriting - in order to gain sales and market share, AND SAVE COSTS shortcuts are taken, thus with the advent of technology, social media and like - UN-examined bad news spreads fast.
3. There must some weakness in the sales process, which the general public is not aware of, meaning the actual communication between the Momentum consultant/broker/agent/adviser AND the client.
4. Call center operators and their principals should note that the general public do not understand most financial products. The center's disclosure commentary leaves a lot to be desired. Even worse is the question and answer process which is normally rushed and misunderstood by both parties. Report Abuse
To make a statement that it will come out of profits and not from consumer premiums is questionable in my mind. Now that they are setting this precedent, certainly going forward shareholder's ROI expectations need to be satisfied and this ultimately must surely come out of premiums (especially at times when investments are not delivering great returns - we are currently in one of those cycles).
Is this being done because they really are pro-consumer or is it because of the negative media and negative consumer sentiment following these articles.
In the short-term industry we have had a couple of direct insurers (or are predominantly direct) who have policy wordings that have excluded cover that would otherwise have been covered by the traditional insurers that operate through intermediaries / brokers (one of the problems with not dealing through a broker). Examples being earthquake damage due to mining operations. When there was such an earthquake - again due to negative media publicity and consumer sentiment - these direct insurers turned around in the media and said a similar thing that they care for their clients and would pay the claims. If it had not been such a large quake that caused so much destruction and received so much media attention would they have paid?
On the short term side I still say it is still best to use a broker and make sure it is a good one. Report Abuse
lied about his medical condition which he was fully aware of. Report Abuse
lied about his medical condition which he was fully aware of. Report Abuse