One of the case studies analysed by the Ombud for Short-Term Insurance was against Alexander Forbes. The client laid a complaint against the insurer when they rejected her claim for damage caused as a result of rising damp. The insurer rejected the claim on the basis that no insured peril had occurred.
After the insurer rejected the client’s claim, the client lodged a complaint to the Ombud disputing that the insurer had not supplied her with the policy documents which contain the relevant exclusions. The client therefore argued that because she did not receive the documents, she lacked the knowledge of the provisions of the policy wording.
The insurer responded to the complaint stating that the relevant policy documentation included the policy wording, policy schedule, the proposal form and its supporting documents. The insurer also contended that the complete set of documents were sent to the client. The insurer also argued that even if the policy documents were not received by the client, that a duty still rested on her to request the policy wording from the insurer. No efforts were made by the client to request the policy wording during a period of two years.
The Ombudsman considered all of the submissions made by both parties. The Ombud also stated that the insurer’s grounds for rejecting the claim are fairly standard and that most policies in the market have similar limitations and exclusions. Furthermore, the Ombud pointed out that even if it were accepted that the insurer failed to provide the policy wording, that this would not necessarily mean that the claim must be honoured by the insurer. In South African law, if an insurer can prove that the documents were sent to the insured’s correct address, then the documents will be presumed to have been received by the insured within a reasonable period, unless the insured can prove the contrary.
The Ombud’s finding was that the client had not proven her allegation that she had not received the policy wording and that the schedule should be considered as the governing contract. There was also no further evidence to hold the insurer liable for the claim and therefore the Ombud upheld the insurer’s rejection of the client’s claim.
Although this was a complaint lodged with the Short-Term Insurance Ombud, this case study indicates the importance for financial advisors to maintain clear records of communication with clients in order for an FSP to show and verify what was actually provided to a client, should a complaint arise. Should this complaint be taken up further with the FAIS Ombud, the financial advisor may be called upon to prove that the important information was highlighted to the client.