The latest newsletter of the Ombud for Short-term Insurance (OSTI): The Ombudsman’s Briefcase Issue 1 of 2019 published on the OSTI’s website contains a few case studies, consumer tips and announcements. Some of the announcements are the OSTI’s Annual Report launch and the OSTI’s new complaint handling process. The OSTI’s Annual Report for 2018, which provides statistical data and operational results, will be launched sometime in May 2019.
The case studies published in this issue focus on misrepresentation or non-disclosure during underwriting of the policy, breach of the policy conditions, reasonable precautions clause, and failure to prove a misrepresentation at claim stage. The case studies are intended to provide guidance and insight into the manner in which the OSTI deals with complaints.
We look at the case study “The failure to prove a misrepresentation at claim stage”, in a bit more detail.
In this case study the insured Mr. F submitted a claim to his insurer in respect of a motor vehicle accident. The insurer rejected the claim on the grounds of misrepresentation and non-disclosure of material facts. According to the insurer, Mr. F misrepresented the facts regarding how the accident occurred as the timeline of events did not match Mr. F’s version submitted to the insurer and the description and sketch of the accident did not match how the accident happened. There were also inconsistencies regarding the timeline with the vehicle diagnostic report and Mr. F’s bank statements as well as the accident not being reported to SAPS. The insurer also stated that the events leading up to the accident were not disclosed on the claim form. Whilst the insurer had raised questions regarding the time line of events prior to the accident, the insurer’s loss adjuster had in fact confirmed in his report to the insurer that there was no evidence to suggest that the incident did not occur as described by Mr. F.
OSTI advised the insurer that it had failed to demonstrate how the facts relied on to indicate a misrepresentation on the part of Mr. F were material to the assessment of the claim and further failed to demonstrate that it had been prejudiced by Mr. F’s conduct. OSTI also reviewed the questions on the claim form and found that the wording on the claim form did not request any disclosure of the events leading up to the accident. Accordingly the insurer had not created a duty of disclosure on the claim form.
Balance of probabilities
In civil matters, the standard of proof is on a balance of probabilities. This means that in order to discharge its onus, the insurer’s version in support of the rejection of the claim, must be found on the whole to be more probable or likely than that of the complainant. After considering the evidence holistically, the OSTI found that the insurer had not proven on a balance of probabilities that it was entitled to reject the claim in terms of the policy provisions. The claim was thereafter settled as per OSTI’s recommendation.