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A balance of probabilities

22 July 2015 Jonathan Faurie
Jonathan Faurie, FAnews Journalist

Jonathan Faurie, FAnews Journalist

What is the role of the insurer when it comes to handling a claim when a crime is involved? What leverage do they have when it comes to rejecting the claim? What evidence do they have to provide to back up their decision to reject the claim?

These were some of the questions raised during a recent case presented to the office of the Ombudsman for Short-Term Insurance (OSTI). The issue of guilt on a balance of probabilities vs guilt beyond reasonable doubt was a key issue.

Vanished in plain sight

According to the recent OSTI Briefcase, the official communique of OSTI, Mr R (the insured) was arrested on a suspected murder charge. While he was under arrest, his motor vehicle was kept in police custody.

He was granted bail, and upon his release, he made enquiries at the police station about the whereabouts of his vehicle. He was informed that the vehicle had been stolen from the police impound lot.

The suspected hit squad card

Upon hearing of the theft, the insured approached his insurer with a claim. His claim was rejected on the basis of the following exclusion: we (insurer) do not indemnify you (insured) for any claim for loss, damage, death, injury or liability which is caused by or results from: illegal activities; any loss or damage caused by the use of property for, or in connection with any illegal activities, and/or the commission of any crime.

During the assessment of the claim, the detective at the South African Police Services (SAPS) advised the investigating officer that the insured had been arrested together with another four suspects on a murder charge. It was alleged that the victim of the crime had been assaulted and then transported in the boot of the insureds vehicle.

This was corroborated by a witness who was also subsequently murdered. The insurer submitted that the insured had been charged with murder and used the vehicle in the crime.

After the insured was released from custody, and enquired about the whereabouts of his vehicle, a case of theft was opened. 

No case

After an additional police investigation into the murder, all charges against the suspects were withdrawn. However, the insurer argued that while the case had been withdrawn, the investigating officer informed the insurer it was only a temporary withdrawal.

The insurer further argued that unlike the state, which has to prove guilt beyond reasonable doubt, the insurer only has to prove guilt on a balance of probabilities. The insurer submitted that it had sufficiently established that the vehicle was involved in the commission of a crime.

The OSTI disagreed and said that the withdrawal of charges against the insured was unconditional. The SAPS corroborated this finding. The insurer took a decision to reject the claim at a time when no evidence had been led in a court of law. The OSTI felt that the insurer’s decision to reject the claim was not based on any tangible evidence and therefore the OSTI was not able to support the insurer’s position due to lack of evidence.

The OSTI said it was a simple case of the vehicle being stolen out of the police impound. However, some members of the SAPS, as well as the insurer, felt that the vehicle was stolen under the direction/request of the insured.

Barking up the wrong tree

The circumstances surrounding the theft were relevant to determine whether the facts entitled the insurer to reject the claim on the basis of the policy exclusion it relied on. The OSTI felt that the proximate cause of the loss was the theft of the vehicle by unknown people.

The OSTI said that the question, therefore, arose as to whether the exclusion was relevant under these circumstances. If the proximate cause of the loss was theft, then the loss was not caused by or resulted from illegal activities or caused by the use of the insureds property for/or in connection with any illegal activity.

The insurer was instructed by the OSTI to pay the claim, which it did.

The final say

In this case, the insurer argued that it accepts or rejects claims based on proving guilt on a balance of probabilities and that it is not bound by the same laws as the state. But because a person has a right to be innocent until proven guilty, the OSTI rightly argued that proving guilt on a balance of probabilities and proving guilt beyond reasonable doubt could not be separated in this particular case.

Editor’s Thoughts:
We have spoken extensively on the changing regulatory environment. Are we adapting quick enough to remain relevant. Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts jonathan@fanews.co.za.

Comments

Added by Tshepo, 28 Jul 2015
Finally the OSTI is working for us. We have been ripped off for a very long time.

@Glyn Davies. I think you should refer your case for a review unless the OSTI is obligated to handle claims that were lodge before they opened doors.
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Added by Glyn Davies, 23 Jul 2015
I had a collision last yr--in which I was charged with dangerous and negligent driving and driving under the influence, to these said points I was subsequently aquited and all charges dropped, however the Innsurer repudiated the claim on The Ballance of Probability in which the Ombusman upheld ? What do you think.
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Added by Eric, 22 Jul 2015
Sorry .edit above to read 'if its the latter'
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Added by Eric, 22 Jul 2015
A good decision under the circumstances.

Inusurers should look for reason to pay ... not reasons not to pay .... if its the former then they should close their doors as they are in the wrong business.
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