Insurer fails to prove non-disclosure in credit life matter

Judge R McLaren, ombudsman for Long-term Insurance.

Despite insurance company Bidvest Life declining a credit life claim on the basis that documents and information were outstanding, the Ombudsman for Long-term Insurance found there was adequate information for the claim to be assessed.

The insurer had also claimed that at the time of application there had been non-disclosure that the deceased was suffering from HIV.

However, the Ombudsman, Judge R McLaren, found that the deceased may have had a pre-existing condition but there was no evidence that he had received treatment or advice at any time during the 18 months’ period prior to becoming a policyholder, as required by the policy.

Credit life insurance provides cover in the event of you having outstanding debt when you die.

The deceased purchased a vehicle through a finance bank and took out an Auto Settlement policy which commenced on 28 March 2008. He passed away on 18 October 2008. In terms of medical reports he passed away as a result of peritonitis and septicaemia.

On 20 November 2008, his wife, who was the complainant in this matter, visited the dealership to lodge a claim for the settlement of the vehicle. She produced a number of documents in support of the claim.

On 23 March 2009 the insurer’s assessor, dealing with the matter, requested the dealership to obtain and submit further documents.

On 21 April 2009 the claim was considered not taken up by the insurer due to the documents not being submitted. There was no further contact with the deceased’s wife.

In October 2014 the Sheriff successfully served the complainant with a Warrant for the Delivery of Goods to the bank, showing that the relevant Magistrates’ Court had ordered the re-possession of the vehicle on 8 June 2010.

The complainant alleged that the dealership had indicated to her that the claim had been settled.

The insurer claimed that neither the bank nor the dealership through which it dealt, could trace the complainant from 2009. The outstanding documents were never submitted and, therefore, the claim could not be properly assessed.

When the vehicle was re-possessed and the complainant’s claim for the benefit was not approved by Bidvest Life, she submitted a complaint to this office.

The matter was submitted to an adjudicators’ meeting, with the Ombudsman presiding, and subsequently a provisional determination dated 18 January 2016 was issued, upholding the complaint.

The insurer held that the deceased had signed the following mandatory declaration, but there was evidence that he did not disclose his HIV status at application stage and the insurer had, therefore, asked for his full medical file and clinical records:

“I am aware that I am not covered for any claim arising out of any injury, disease, or illness which is, in the opinion of McLife (which subsequently became Bidvest Life), related to a previous injury, diseases or illness for which I received medical treatment or advice at any time during the 18 (eighteen) months prior to becoming a policyholder.”

The meeting’s view was that adequate documents were submitted for the insurer to reasonably assess the claim. The deceased may have had a pre-existing condition but there was no evidence that he had received treatment or advice at any time during the 18 months’ period prior to becoming a policyholder as required by the policy.

The cause of death had been advised by a medical practitioner and there was confirmation that the deceased had only become aware of the condition that caused the death days prior to the date of death.

Bidvest Life had not proven non-disclosure of information or the applicability of the exclusion clause.

The meeting upheld the complaint and asked the insurer to consider the claim on the documents provided.

The insurer agreed to assess the claim and subsequently made a settlement offer to pay R40 000 of R102 462.53, being the amount due as at the date of loss, provided by the finance bank.

Bidvest Life submitted a detailed statement showing transactions from 28 March 2008 to 11 February 2015, on which date the capital balance amount is shown as R156 292.24. This amount includes costs, such as legal fees, re-possession costs, storage fees at vendor, service fees and interest and also bad debt amounts written off.

The insurer added that given the circumstances and the facts of this matter, R40 000 was an equitable offer in final settlement as the complainant should be apportioned some blame to her failure to follow up on this matter over an extended period of time; she had not submitted requested documents and had placed the insurer in a position that the claim could not be properly assessed, while there had been evidence that pointed to non-disclosure of the deceased suffering from HIV at application.

The offer was rejected by the complainant. The complainant’s attorneys noted that the outstanding liability to the finance bank had amounted to R321 243.70. It is not clear how this amount had been calculated.

At the adjudicators’ meeting held on 29 April 2016, the Deputy Ombudsman presiding, the meeting decided that the complainant had a responsibility to make enquiries with the insurer about the status of the claim instead of relying on the dealership’s alleged oral confirmation that it was settled. She had not produced any evidence of confirmation that the claim had been settled.

The complainant was not entitled to the amount of R321 243.70 that she was claiming. According to the insurer their outstanding liability at the date of the event was R102 462.53.

The insurer was ordered to make payment of R102 462.53 to the estate of the deceased which Bidvest Life has done.