Life Ombud: Determinations against Life Insurers in 2009

As stated earlier, determinations were made against subscribing insurers on three occasions during 2009, and for their full details they are on the office’s website. The following are brief summaries of the issues in them.

In the first case the complainant, who had become ill, instituted a claim against Hollard Life for a benefit in terms of an income disability scheme to which she belonged by reason of her employment with Hollard Life itself and to which Hollard Life, as her employer, contributed premiums on her behalf. Her illness, so she claimed, disabled her from working and although she remained in the employ of Hollard Life she went on unpaid leave. When she did so Hollard Life paid no further premiums in respect of the scheme on her behalf. She did not commence paying the premiums herself, and because her illness arose thereafter Hollard Life contended that she was no longer covered. When she instituted her claim two issues arose. The first was whether Hollard Life, by a letter it had written to her after she went on unpaid leave, had misled her. In that letter she had been advised that, because she was on unpaid leave, Hollard Life would no longer pay contributions on her behalf for her medical aid or provident fund, and that to keep them active she would have to pay these herself. Nothing was said about the premiums in respect of the income disability scheme. She claimed that the letter had misled her into believing that she would remain on the scheme without having to pay further premiums herself. The office ruled in her favour and added that it would in any event be unfair to terminate her membership of the scheme without first advising her in clear terms that she herself would have to pay the premiums. The other issue was whether she was in fact disabled as defined in the rules of the scheme, which the office therafter proceeded to investigate.

In the second case the complainant applied in 2005 for a policy with PPS Insurance. During 2007 she underwent a breast reduction operation and made a claim under the policy for a Sickness Benefit, a daily benefit payable while an insured is unable to work due to sickness. It appeared from the medical reports accompanying the claim documents that the complainant’s breasts had increased in size since 1994 after the birth of her children, and in the proposal form which she signed in 2005 she had answered in the negative to the question “Have you ever experienced … any abnormal functioning or growth … of your female organs, this includes but is not limited to, breast masses, abnormal breast size … ?” The issue was whether the complainant, as a reasonable prudent person, should have answered the question positively. On the facts of the case the office ruled that the complainant had honestly believed that the increase in size of her breasts was not abnormal, that her negative answer to the question had been correct and that she had not non-disclosed.

In the third case a 59 year old practising dentist made a claim against PPS for a Partial Permanent Incapacity award in terms of his policy. He had inter alia become blind in one eye, and had developed chronic ischaemic heart disease resulting in two myocardial infarctions with extensive coronary calcification. He had therefore abandoned his practice and for no remuneration had undertaken a project to develop a managed health programme for the African continent. The two issues were first whether this project, for the purposes of the definition of Incapacity in the policy, amounted to practising a profession, and secondly whether his incapacity was to be fixed at 20% as PPS contended. The office ruled that his new endeavour did not amount to practising a profession and a determination was issued fixing his incapacity at 60%.