Life ombudsman issues three determinations in 2009
Since mid-2009 Judge Brian Galgut (Ombudsman for Long-Term Insurance) has had the power to ‘name and shame’ the insurers he determines against. In the scheme’s Annual Report 2009 he outlines the three determinations made in the latest year. In today’s newsletter we take a brief look at the facts in each determination.
Vague communication on policy premium slated
The first determination covers a complicated chain of events. A Hollard Life employee instituted a claim for benefits in terms of an income disability scheme, to which the company contributed premium on her behalf. Hollard stopped paying the premium when the employee took unpaid leave. The employee did not resume payment of said premium in her own capacity and the insurer refused her subsequent sickness benefit claim on the basis she was no longer covered.
The Ombudsman sought clarity on two fronts: “The first was whether Hollard Life, by a letter it had written to the employee after she went on unpaid leave, had misled her.” The correspondence only advised the employee that Hollard would no longer pay premium on her medical aid and provident fund. “Nothing was said about the premiums in respect of the disability scheme.” The second issue was whether the employee was indeed ‘disabled’ as defined in the rules of the scheme. The office found for the complainant in respect of the first issue – observing that it would be unfair to terminate the employee’s membership of the scheme without first advising her in clear terms that she was responsible for ongoing premiums.
Hollard was “instructed to assess the claim on the basis of all medical information submitted including the medical information in support of a claim based on depression/anxiety and including information submitted after 30 April 2007.” The company had 30 days from date of determination to comply, and was requested to revert to the Ombudsman with its detailed evaluation of the complainant’s disability. This determination underlines the need for transparent and effective communication between insurer and policyholder.
Fair and reasonable expectations
In his second determination the ombudsman took PPS Insurance to task for refusing to honour a claim for daily sickness benefits under one of its policies. The insured underwent a breast reduction operation and claimed for a daily benefit offered by the policy in the event she was unable to work due to sickness. The insurer relied on non-disclosure in refuting the claim. The complainant answered the following question in the negative when she applied for cover in 2005: “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…”
At claims stage it emerged the complainants breasts had increased in size since 1994, after the birth of her children. “The issue was whether the complainant, as a reasonable person, should have answered the question in the affirmative?” said the Ombudsman. He ruled that a reasonable prudent person would not consider this to be abnormal functioning or growth in or any of (her) female organs. The adjudicators took the prima facie view that the complainant had answered the questions in the proposal form honestly and truthfully. The final determination required the claim to be considered on its merits, the exclusion clause removed and compensation of R4 107.20 paid.
What constitutes a practising professional?
The third and final determination was also against PPS Insurance. After paying a sickness benefit for two years, PPS decided to set a dentist’s Partial Permanent Incapacity award at just 20%. The 59-year old dentist was effectively blind in one eye and had developed chronic ischaemic heart disease after two myocardial infarctions. He also exhibited extensive coronary calcification. An ophthalmic surgeon led evidence that the complainants reduced visual acuity would severely handicap his ability to practice: “It would be very difficult to position instruments accurately particularly when working at the back of the mouth.”
PPS limited the benefit because the dentist had undertaken a voluntary assignment to develop a managed health programme for the African continent, which they said amounted to practising his profession. The dentist complained to the Ombudsman who notes: “In response to our provisional determination in favour of a 60% benefit for the complainant, PPS confirmed their previous decision that the complainant only qualified for a 20% benefit.”
The Ombudsman had to decide whether the dentist’s voluntary work amounted to ‘practising a profession’ in terms of the incapacity wording in the policy, and whether the 20% incapacity proposed by PPS was fair. “The office ruled that the new endeavour did not amount to practising a profession and a determination was issued fixing the incapacity at 60%.”
Editor’s thoughts: As a layman we were surprised by the nature of the complaints that the Ombudsman was forced to determine on. In each case it seemed a reasonable assessment by the insurer would have resulted in an immediate resolution in favour of the complainant. Do you believe that insurers use the complaints resolutions process to delay legitimate payouts? Add your comment below, or send it to [email protected]
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