Life Ombud issues two determinations arising out of complaints involving funeral policies.

Whenever a final determination is made against a subscribing insurer, the Ombudsman is required, in terms of his office’s Rule 3.8, to publish such determination, including a summary of the facts concerned, the reasons for the determination and the identity of the subscribing insurer.

Summary of cases

1. The first case, Case 5/2010, concerns the late submission of a funeral claim under a policy underwritten by Sekunjalo Life Assurance Limited. The claimant submitted a claim on the death of her husband 9 months after his death but the policy stipulated that claims should be submitted within 6 months. The insurer declined the assessment of the claim due to the late submission.

In this case the insurer was directed by the office to assess the claim based on two different considerations:

i. The insurer was not justified by the provisions of the relevant policy to refuse to assess the claim. The insurer relied on a policy clause which stated that claims have to be notified within the time limit but the clause does not stipulate that failure to lodge a claim will result in the claim becoming unenforceable.

ii. In any event, fairness required the office to exercise its equity jurisdiction in favour of the complainant. The office took the following factors into account in exercising its equity jurisdiction.

· The delay in lodging the claim was not excessively long since it was merely three months outside the time limit.

· The claimant’s allegation that she never received the policy contract was not shown by the insurer to be untrue on the probabilities.

· The insurer’s assessment of the claim on the merits was unlikely to be hindered by the unavailability of witnesses’ statements, police accident reports, etc, since the deceased’s death was due to natural causes, rather than by accident.

· The insurer had not shown that it may be prejudiced in any manner by receiving and assessing the claim outside the prescribed time limit.

After assessing the claim Sekunjalo found it to be valid.

2. The second case, Case 6/2010, concerns the submission of a death claim under a policy issued by Union Life. The insurer had declined the claim on the grounds that the policy was still in a waiting period. There was a 3 month waiting period following the inception of the policy or the reinstatement of the policy (after non-payment of premiums) during which only accidental death was covered.

The premium for January 2009 had not been paid and the policy lapsed. When the next premium was paid on 3 February 2009 Union Life in terms of their normal practice reinstated the policy and applied this payment to the outstanding January premium and the three month waiting period applied. As the insurer applied each subsequent payment to the premium due for the previous month, cover remained subject to a three month waiting period.

This practice was contrary to the policy provisions. The premium paid on 3 February 2009 should have been applied for February. The waiting period would then have expired on 30 April 2009. The date of death was on 27 June 2009 and fell outside the waiting period.

The office made a determination that the claim should be paid on the basis that the policy was in fact not in a waiting period as Union Life had not applied premiums after reinstatement correctly.