FAIS Ombud Ruling: Onus is on insured to ensure premiums are paid

It is the duty of an insured to ensure the premiums are paid up to date on a policy once it has been incepted, the FAIS Ombud has cautioned.

Charles Pillai (pictured right), the Ombud for Financial Services Providers, dismissed a complaint by Elize Roseline Wall against One Call Insurance Brokers of Johannesburg when her claim for accident damage to her motor vehicle was rejected on the grounds that the policy had been cancelled after two unsuccessful debit orders.

The Complainant asserted that after the two debit orders were not met, she furnished One Call Insurance Brokers with new bank details. She said it was the Respondent’s responsibility to give those details to the Insurer, ABSA Insurance, to debit the premium.

She maintained that her vehicle was insured through Respondent. Therefore. the Respondent should indemnify her for her loss.

The Respondent told the FAIS Ombud it does not receive or handle insurance premiums from clients. All debit orders are processed by the underwriter or their appointed representatives.

Respondent added that Complainant made no effort to confirm whether premiums were successfully debited from her bank account. In fact, according to the Respondent, the Complainant had no access to or control of any kind on the new bank account that she had furnished after the two debit orders were not met.

In finding that the Respondent was not the cause of the Complainant’s loss, the FAIS Ombud said the rejection of the Complainant’s claim was as a result of non-payment of the premiums.

“From the facts it appears that ABSA Insurance were not able to debit the first two premium payments.

“The Complainant was aware of this fact. It was to remedy the non-payment of premiums that a different account was introduced.

“The Complainant had no way of establishing whether premiums were paid on the new bank account. She clearly indicated that she could not ascertain this as she did not have access to the bank account in question.

“Ignoring her responsibility to pay the premium, she maintains that no one notified her that her policy had lapsed.

“All along, she was under the impression that her policy was in force based on the fact that she had been given a policy number.

“I find Complainant’s assertion that she did not know that the policy has lapsed, difficult to accept.

“Her conduct in attempting to remedy the non-payment of premiums with a new bank account, in my view, clearly indicates that she did so with full knowledge both of the non-payment of the premiums, as well as the fate of the policy,” the Ombud said in his ruling.

The Ombud added that the obligation to pay premiums is an obligation of the insured. This is an obligation that stems from the nature of insurance as a bilateral, reciprocal contract.

“Even after the Complainant had furnished new bank details to Respondent, she made no effort to inquire whether the premiums had been paid.

“The circumstances surrounding the change of bank details were, in my view, clumsily handled. This, after Complainant’s default from inception of the policy in not paying premiums.

“One almost gets the sense that Complainant intended not to disclose this fact, which explains the way she went about omitting to mention that detail, in the first instance in all her correspondence to Respondent and also to this Office.

“Complainant in my view has failed to show non compliance and or negligence on the part of Respondent. The complaint, therefore, falls to be dismissed,” the
Ombud ruled.