The consequence of one wrong move

Open and honest communication has often been a criticism in the insurance industry. Policyholders often feel hard done by when insurers rule in a certain way, while insurers may be completely justified in their rulings.

However, there are times when intermediaries act incorrectly and find themselves answering to industry regulators after policyholders seek restitution. And when they have to answer to these questions after negligence on their part, regulators are often unsympathetic in their findings.

This was the issue in the recent determination by the Financial Advisory and Intermediary Services Ombudsman (FAIS Ombud). This was a complaint arising out of the failure by the respondent to timeously submit the complainant's insurance claim form to the insurer.

Bad customer service?

Following a motor vehicle accident on 14 November 2008, Luke Carazzo duly submitted a claim to the respondent (Aquarius Insurance Consultants and Maurizio Scolari hereafter collectively referred to as the respondent). 

Carazzo followed up on the claim several times over the next few months and after a while he was told that Innovation Group would be handling his claim. Carazzo made contact with Innovation and provided his policy number. In response, he was advised that his claim had not been received from the respondent. 

Despite following up the claim with the respondent on numerous occasions, Carazzo was unsuccessful in achieving any resolution and was finally informed that the claim would not be settled as Innovation contended that his claim documentation had not been submitted by the respondent within the requisite time frame.

Carazzo then submitted a complaint to the FSB regarding the service of the respondent and in turn, the FSB forwarded the complaint to the Ombud.

The blame game

The Ombud afforded the respondent and Innovation the opportunity to resolve the complaint with Carazzo, however, the complaint remained unresolved and the parties were then required to revert to the Ombud’s Office with their full version of events. 

Innovation's version was that the respondent had been requested to submit all outstanding claims to them for processing, yet had failed to do so. They elaborated that an excel list of twenty one claims was emailed by the respondent to Innovation however, Carazzo’s claim was not on the excel list. 

Contrary to the version submitted by Innovation; the respondent, as part of the reply submitted a printed out copy of the email. On the respondent's copy and in contrast to Innovation's copy, this copy appeared to contain an attached file, with the name; 'L Carazzo.pdf.' It appeared that the respondent had indeed submitted the claim to Innovation. 

Innovation in turn disputed the authenticity of this email printout, and denied that the email which they received contained the said file. They pointed out that whilst all of the other files make reference to the documentation which they contain; this is not the case in Carazzo’s case. 

Intentional deceit?

However, over and above Innovation's comments there was one other anomaly. This being that the subject line was duplicated on the respondent's version which suggests some form of cut and paste. 

Multiple versions of the submission where given to the FAIS Ombuds Office over the course of the investigation, and on several occasions, the Office requested that the respondent email the actual correspondence as an attachment. The respondent  however, never provided the email in the required format.

In summary; despite having afforded the respondent more than ample opportunity to prove the timeous submission of documentation, the respondent has to date failed to do so. Additionally, the question marks around the very submissions that the respondent made, favor the probabilities that the claim was never submitted to Innovation.

Adding weight to the conclusion is the respondent’s failure to submit the pertinent email in the required format, in spite of more than a few requests by the Office. Besides the fact that records relating to the financial services rendered to the client were not maintained, the respondent clearly failed to act with due skill, care and diligence.

As such the respondent allowed Carazzo to suffer a loss through either poor administration or negligence. As an administration company, Innovation could not have been expected to settle a claim they had not received. Having administration companies administrate the claims process can most certainly be beneficial.

For damages caused the respondent is ordered to pay Carazzo the amount of R20 173.35.

Editor’s Thoughts
Consumers are more likely to approach an Ombud for assistance as the Policyholder Protection Rules “educate” consumers as to their rights if they are unsatisfied with an outcome. As an intermediary open and honest relationships with insurers remain critical as mistakes can happen and sweeping the mistake under the carpet will not make the problem go away – it is better to tell the truth—even when it hurts. Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts [email protected].

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