Policyholder vs. broker: who’s responsible?
Ombud determinations help clarify important aspects of financial services, promoting transparency and fairness in the industry.
We’ve summarised the FAIS Ombud’s recent decision involving an insurance claim dispute that offers valuable insights for both policyholders and providers.
The complaint
Mr Christo Nel insured his Toyota Fortuner on 1 August 2020, meeting the required security conditions: a factory-fitted alarm, immobiliser, and a CIB-approved tracking device. His vehicle was stolen on 2 July 2023, and when he submitted a claim, CIB requested proof of a secondary tracking device, which he had never been informed was required.
He was only made aware of this new requirement after the theft, despite it taking effect on 1 April 2023. Mr Nel argues that Barton failed in its duty to inform him of the policy change, which led to his claim being rejected on 1 September 2023 for non-compliance.
The respondent’s response
Barton Insurance Brokers, a licensed financial services provider, confirmed that Mr Nel held a short-term insurance policy with Guardrisk via administrator CIB since 2018, covering his Toyota Fortuner. On 2 July 2023, the vehicle was stolen. Barton was informed on 6 July that the claim might be rejected due to the lack of a second tracking device, required for high-risk vehicles like Fortuners from 1 April 2023.
On 1 March 2023, Barton emailed a policy update about this requirement, using CIB’s instructions. The email was sent to Mr Nel’s wife, Sarie Nel, whose address was listed in CIB’s internal system, as she was previously a co-policyholder. Barton admits that no follow-up call was made to confirm receipt - this was the only missed call among affected clients.
Barton believes it fulfilled its duty to inform Mr Nel, explaining that Sarie’s email was on record from when they were co-policyholders. Though Mr Nel became the sole policyholder in July 2020, the email address was never updated. Barton only realised this after the loss and updated the contact details on 20 July 2023 based on Mr Nel’s verbal instruction.
Further submissions from the complainant
Mr Nel disputes receiving an important policy change notification from Barton, as it was sent to the wrong email address - not his own or his wife’s. He has been the sole policyholder since July 31, 2020, and consistently communicated with Barton using his correct email.
Despite frequent email exchanges for policy changes (at least 21 times), Barton sent the critical notification to an incorrect address and failed to confirm receipt through other means like a phone call. Even after March 1, 2023, Barton did not inform him of the new tracking requirement, which later led to the rejection of his insurance claim. Mr Nel alleges Barton acted negligently.
Attempts to resolve the matter
The Office initially closed Mr Nel’s case on 22 April 2024, finding no reasonable prospects of success due to a lack of evidence that he instructed Barton to update his email address. Mr Nel challenged this and applied for reconsideration with the Financial Services Tribunal, which issued a ruling on 5 November 2024, identifying grounds for Barton’s liability.
Following the Tribunal’s findings, the Office recommended on 13 November 2024 that Barton settle the claim. Barton, however, disputed the ruling, arguing it had used the only email address on record - Mr Nel’s wife’s - and could not legally change it without his explicit instruction. They maintain there was no evidence Mr Nel requested an email update.
The assessment of the evidence
The Office reconsidered the case following the Tribunal’s order, confirming that the theft and claim rejection facts were undisputed. The key issues were whether Barton negligently failed to update Mr Nel’s email and took reasonable steps to inform him of the new tracking requirement.
While Barton argued it wouldn’t change contact details without direct instruction, the Office found it should have reviewed and updated the contact information when Mr Nel became the sole policyholder in 2020 - a significant change. Despite ongoing communication with Mr Nel’s email (not his wife’s), Barton never updated the records or confirmed contact details.
No follow-up call was made to confirm receipt of the notification about the secondary tracker, worsening Barton’s negligence. The failure to send the notification to the correct email and to follow up likely caused Mr Nel’s loss, making Barton liable.
The insurer estimated the claim payout would have been R681 250. Barton denied liability even after a draft determination was shared for comment.
The order
The Office’s findings are that the complaint is upheld, and Barton is ordered to pay Mr Nel R681 250 for the insured vehicle, plus interest at 11.25% per annum from the date of the determination until full payment.
Read the full determination here
Writer’s Thoughts
This case underscores the importance of clear communication and diligent record-keeping between insurers, brokers, and policyholders. Staying informed and proactive can help avoid costly misunderstandings. Do you agree? Please comment below, interact with us on X at @fanews_online or email me your thoughts at [email protected].
