Judge Ron McLaren of the Ombudsman for Long-Term Insurance.
The insurance industry must become more yielding, and where necessary, supplement policy provisions with equity by acting in a more reasonable and fair manner that also reflects ubuntu which carries within it humaneness.
This was the gist of a final determination by the Ombudsman for Long-Term Insurance, Judge Ron McLaren, when he said ubuntu was enshrined in the law and consumer protection also took into account the disparity in bargaining power in most insurance contracts as well as the technical nature of insurance agreements.
Judge McLaren was ruling in a matter in which Sanlam Developing Markets (SDM) refused to pay claims under three funeral policies on the grounds that the deceased had been misrepresented as the ‘son’ of the complainant in the policy document.
The complainant had taken out a funeral policy in 2013, 2015 and in 2016, covering her family and included the deceased as a life insured and paid premiums for him.
The complainant had cared for the deceased from 2009 until his death on February 1, 2018 after he was stabbed during a robbery.
She said she had helped the deceased’s family when they were experiencing hard times in a rural settlement. In December 2009, the deceased began living at her house with her own children and refused to go back to his family.
The complainant regarded the deceased as part of her family, even though there was no legal adoption. There was mutual affection between the complainant and the deceased.
She enrolled him at high school and arranged for his customary circumcision. She treated him like she did her other children because ‘according to our tradition, an orphan is treated the same way as the kids he lives with’.
“He called me ‘aunt’ and later called me ‘mum’. The aunt of the deceased said the complainant had become a parent to him and supported him with food, clothing, education and medical attention. To prove that she did not have any regrets for caring him as her son, she paid all the funeral expenses in remembrance of all the time they spent together,” the aunt said.
The deceased’s sister and brother as well as the village headman confirmed that the complainant had taken care of the deceased.
However, SDM refused the claims on the basis that the complainant had described the deceased as a family member when there had not been a blood relationship. SDM refunded premiums paid in respect of the deceased.
The Office of the Ombudsman for Long-Term Insurance suggested to SDM that they should consider equity/fairness given the circumstances of the relationship between the complainant and the deceased. The insurer was not prepared to make a concession.
Their view was that there had been a material misrepresentation and that SDM would not have accepted the risk had they known of the true relationship.
The complaint was discussed at a adjudicators meeting convened by the Office of the Ombudsman for Long-Term Insurance.
The meeting was of the unanimous view that in this particular case, given the circumstances of the complainant in relation to the deceased, the insurer should in fairness pay the claims under the policies, less the amounts already paid.
SDM again refused to pay the claim. “Our unanimous conclusion is that, taking all considerations into account, this claim should not be paid – no matter how much one’s heart goes out to the bereaved policyholder,” the insurer said.
In his final determination, Judge McLaren said SDM was of the view that equity/fairness could only be applied within the confines of the actual policy provisions.
“If that is so, there would be no need for an equity/fairness jurisdiction. It is precisely when the application of the policy provisions leads to an unfair/inequitable result that it is necessary to exercise our equity jurisdiction,” he said.
The Ombudsman disagreed with SDM’s assertion that it was an intentional misrepresentation by the complainant and that there can be no equity applied in this case.
He added that the complainant had submitted that the intermediary who sold the policies did not point out that there had to be a blood relationship between her and the deceased.
The Ombudsman also said ‘fairness’ informed the decision that SDM should pay the claim. The SDM was ordered to pay the claims (less premiums refunded) plus interest.