It is estimated that motor vehicle accidents cost the economy in excess of R306 billion a year. This is not only burdensome to the economy, but to insurers who are in some aspects fighting a losing battle when they are handling the high volume of accidents that occur in the industry on a daily basis.
There must be some way in which insurers can protect themselves against unnecessary losses. But as a recent case focused on by the Office of the Short-Term Industry (OSTI) Ombudsman points out, insurers have to be very sure regarding their reasons for implementing protection measures.
Fast and furious
In its 2014 annual report, OSTI referred to a case where the insured was involved in a motor vehicle accident where police attended the scene.
After conducting breathalyser tests and obtaining readings of 0.61% and 0.00% for the third party and the insured driver respectively, the police proceeded to conduct further blood tests.
The collision had apparently occurred at an intersection where the third party was alleged to have ignored a stop sign.
During the validation of the claim, the insurer had discovered that there was a pending criminal matter for driving under the influence of alcohol against the insured driver. The insurer then decided not to honour the insured’s claim until the blood results were available. This was communicated to the insured on 12 August 2013.
Show your hand
According to the insurer, the insured had to carry the costs relating to the loss until the criminal matter had been finalized, and the insurer would at that stage then pay out the claim if the outcome so dictated. The matter was referred to the Ombud in January 2014 when the blood test results had not yet been received.
During the investigation of the matter by the Ombud, the insurer was required to show that there was a reasonable basis for them to await the blood results. The insurer had not alleged or substantiated any facts or circumstances which suggested that the insured had been driving under the influence (DUI).
In response, the insurer pointed out that the insured had not only undergone blood tests but had actually been charged for a similar offence in the past.
The current criminal matter was pending the availability of the blood alcohol test results. Amongst the insurer’s own submissions was a statement by the police officer who attended the scene. The insurer had also submitted that the criminal docket had since gone missing and insinuated that the insured may have been involved without any substantiation
On the wrong track
The Ombud found that the insurer failed to prove that there was a reasonable basis to await the blood results before attending to the claim. Apart from the fact that the tests had been conducted on both drivers, there was no proof that the insured driver had been under the influence, on a balance of probabilities.
The statement given by the police officer had explained why he had conducted the tests, but that he did not appear to have any suspicions that the insured driver had been under the influence; he was merely following standard operating procedures.
It was pointed out to the insurer that they had had the opportunity over the period of almost a year to investigate the matter and to establish if there was a reasonable basis to insist on awaiting the blood results, but had failed to do this.
Find the sweetspot
Given the fact that there are so many accidents on the roads, insurers need to protect themselves in some way. The use of the balance of probabilities clause is usually an effective method of protection and was featured in an Ombud ruling that we published last month.
However, the balance of probability clause needs to be applied correctly. The reason the insurer claimed that it applied the balance of probability clause to this case was that the third party had a pending criminal case against him which was related to DUI.
This then would indicate that the insurer may have been implying that the third party was guilty of being under the influence because he has a track record of driving while under the influence. But this is the exact problem that people have with telematics, that if the data is not interoperated in the correct manner, it could lead to guesswork in the industry.
Editor’s Thoughts:|
There is no doubt that technology can play a major role in improving the defence that companies can present. However, technological processes need refinement and we need to know how to interoperate the data presented by technology. Are we ready to use it to our advantage, or will the battle continue for another five or ten years? Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts jonathan@fanews.co.za.
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