Fais Ombud finds insurance underwriters in breach of policy

Johannesburg – An insurance company has been ordered to pay a woman from Phoenix in Durban R30 000 after repudiating a claim in terms of the insurer’s “Journey Traveller” policy when the woman was hospitalised after the taxi in which she was travelling overturned.

Insurance underwriters Bensure, which was acquired by Workers Life Insurance in 2009, was found by Ombud for Financial Services Providers (FAIS) Noluntu Bam to be in breach of the policy in failing to pay the woman’s claim.

Bam said in Bensure’s own version, it had not found reason to reject the claim based on the policy and was, therefore, obliged to pay the woman’s claim. She added that Bensure’s reliance on an amended policy was “bad in law” and her office found there was no effective amendment to the policy.

Bensure was, therefore, bound by the policy as issued to the complainant.

The woman said she was involved in an accident in January 2010 when the taxi in which she was travelling overturned, resulting in the death of two other passengers and her being trapped in the taxi for almost an hour.

The complainant said she had to be cut from the wreck of the taxi by fire fighters and was taken to Kingsway Hospital in Amanzimtoti, where she was admitted and spent four days before being discharged. The woman filled out a claim form after her discharge from hospital but the claim was rejected, with Bensure stating that hospital reports indicated she was admitted for observation and not for any “life threatening” injuries.

Bensure claimed the policy the woman had taken out was amended and in terms of the amended policy they were entitled to reject the claim.

Written notice

Bam said there was a duty on the insurer to give at least four months written notice of any material amendment to the policy. Bensure was also obliged to keep the insured informed of material changes to the policy, so that she could make an informed decision about whether or not to accept the amendments and continue with the policy, and to keep and maintain a record of material correspondence.

Bensure claimed the updated terms and conditions of the policy were communicated to the woman via the South African postal service and were sent to the complainant “prior to 2010”.

Bam said her office had a number of difficulties with Bensure’s response. She said Bensure did not provide her office with any proof of postage and it would be reasonable to expect that such an important notice of amendment to the policy would be delivered by registered post.

Bam said Bensure did not even provide the address to which the notice was allegedly posted and could not even give a date when it had allegedly posted the notice of intention to amend.

She said Bensure claimed the notice to amend was sent “prior to 2010” and the accident happened in January 2010, which made it crucial for Bensure to inform her office of the exact date of the notice.

Bam added that Bensure was also unable to furnish her office with a copy of the notice and nor was there any proof that the complainant had responded to or approved the amendment.

She said her office therefore found on a balance of probabilities that Bensure failed to prove it had complied with the rules of the policy and could not place any weight on the amended policy.