Posts in category: Case Reports

Pre-existing condition clause in disability benefit– time limit on conditions excluded – onus on insurer to prove the pre-existing medical condition existed within the time frame and its causal link to the disability

The complainant was employed by the employer as long-haul truck driver in July 2016. On 1 November 2016 he became a member of the union’s Provident Fund and an insured under the fund’s group risk policy.

A claim for disability benefits was submitted to the insurer in February 2018 following the complainant being declared unfit to work as a result of “anterolisthesis and spondylosis with ischiatic nerve irritation, with referred pain to the left leg associated with weakness”. The date of disability was determined to be 1 July 2017.  The insurer declined the claim because the complainant’s “disability was traceable to a condition of which symptoms (weakness and referred pains in his left leg) were experienced in the six months before his cover started.”

The insurer relied on the medical report dated 6 November 2017 in which the doctor stated: “(The claimant) was involved in a train accident 2003 and injured his lower back. He was suffering since 2003 with chronic lower back pains and since 2017 experienced the weakness and referred pains his left leg.”

The policy stipulated that a benefit is not payable if the insured becomes totally disabled within 12 months of commencement of cover if the disability is directly or indirectly traceable to:

• a bodily injury which occurred, or
• a condition of which the INSURED was conscious or experienced symptoms for which medical treatment was received during the six MONTHS immediately before the mentioned date.”

We pointed out to the insurer that the complainant’s cover commenced on 1 November 2016.  According to the doctor, the symptoms referred to (weakness and referred pains in his left leg) only commenced in 2017.  The history of consultations shows the first date of consultation as 8 March 2017.  This appeared to be corroborated by the report of another doctor dated 10 July 2017, which states that the patient reported a 5-month history of worsening lower back pain.

We also pointed out that a “Road Traffic Act” medical report was completed on 23 June 2016, seemingly as part of the requirements to obtain a driver licence to drive a heavy duty vehicle, wherein the question of whether the complainant, to the best of the doctor’s knowledge, suffered from any condition causing muscular incoordination, was answered in the negative, and the complainant was given a clean bill of health for the purposes of driving a heavy duty vehicle.

Whilst we acknowledged that the insured suffered a back injury in a train accident in

2003, seemingly to the lower back, we were not convinced that the insurer had discharged the onus of proving that in the six months prior to commencement the insured had a condition of which he was conscious or experienced symptoms for which medical treatment was received.  We did not think a broad statement “since

2003 chronic lower back pain” was sufficient to prove on a balance of probabilities that the condition (of chronic lower back pain) occurred in the six months prior to the commencement or that the insured was conscious of the condition in those six months.   We therefore asked the insurer if there was any medical or other evidence specifically pertaining to the six months prior to the commencement to support their contention that the insured had a pre-existing condition as described in the “pre-existing condition” clause.

In response, the insurer decided to admit the claim and the benefit of R267 562 was paid to the fund, for the benefit of the complainant.

This case demonstrates that an insurer has to provide the medical evidence required to prove, on a balance of probabilities, the pre-existing medical condition and its causal link to the claim event.

Background

The deceased had a policy which provided cover in the event of accidental hospitalization.  The deceased had been hospitalized for an extended period from 16 June 2016 to 18 August 2016.  The complainant who is the deceased’s son, phoned the insurer to enquire whether he could claim under the policy.  The complainant advised the call center consultant that the insured was hospitalized for difficulty with breathing.  The complainant was given a claim number and had to obtain claim information.  The call center consultant did not inform him that this was only an accident policy.

The following claim requirements were sent to the complainant via e-mail:

• identity document
• detailed hospital account
• confirmation of bank details
• discharge summary report
• motivation letter from doctor explaining why it was necessary to be hospitalized for more than 3 days.

The complainant had to incur costs and had trouble obtaining this information, which he submitted to the insurer on 22 September 2016.  He then followed up with the insurer on 11 October 2016.

On 17 October 2016 the insurer advised him that the claim was declined as the policy only covers:

• bone fractures
• second degree burns
• dislocation requiring surgery

Discussion

We raised the following with the insurer:

• why did the call center consultant not inform the complainant that the policy only provided cover in the event of an accident?
• why could the author of the e-mail message listing the claim requirements also not do so?

The insurer informed us that the relevant staff members could not give advice and therefore could not advise the complainant on the outcome of the claim.

Result

Although the complaint could not be upheld, the insurer agreed to pay compensation amounting to R5 000.00 for putting the complainant to unnecessary trouble and inconvenience to provide documentation in a claim that could never succeed.

Background

The complainant applied for life cover to the insurer in July 2007.  During August 2013 she added additional benefits, inter alia a dread disease benefit to the policy.  In March 2016 she increased the dread disease cover and in her application form to increase the benefit, she answered in the negative to all of the following questions:-

“a) Since completing the medical questions on your existing policy application, have you been diagnosed with any disease(s) or disorder(s) that requires ongoing or intermittent management (medication, monitoring or other treatment(s))?

…

1. Have you had or are you scheduled for any medical investigations or examinations in the next eight weeks, for example x-rays, scans, biopsies or other surgical procedure, blood investigation or specialist assessments?

…

1. Are there any circumstances that may have arisen since the last disclosure you have made for this policy, which may affect the assessment of risk for the cover or benefits you are applying for in this application form? You have to tell us again of any health circumstances that you have disclosed in your original application form…”

Since no adverse medical information was provided in the application form to increase the benefit, the dread disease benefit was increased.

On 10 May 2016 the complainant submitted a dread disease claim to the insurer after being diagnosed with breast cancer.  On investigation of her claim, the insurer established that on 19 June 2013 the complainant underwent test to determine the presence of the BRCA2 gene.  A pathology report dated 03 September 2014, received by the insurer at claim stage, confirmed a sequence variance in the BRCA2 gene.  On 07 March 2016 the complainant consulted a general surgeon “with the intention of discussing a possible risk prevention plan to be pro-active against the BRCA2 risk.”

The insurer declined the claim in respect of the increased portion of the dread disease benefit.

The complainant approached our office for relief and alleged that “In a totally unrelated exercise, I consulted a surgeon, Dr A, on 7 March 2016 with the intention of discussing a possible risk prevention plan to be pro-active against the BRCA2 risk.  The BRCA2 statistics prove average cumulative risks by age 70 years are 45% for breast cancer and 11% for ovarian cancer. The risk of contracting breast cancer at my age was therefore being placed on par with other woman same age bracket. In the medical profession it was considered ‘radical’ to get a prophylactic double mastectomy as well as ovary removal. At such stage neither I nor the doctor was concerned about having cancer as all previous test results were clear and I was given time to think about the options.

On 18 April 2016 Dr A attended to a core needle biopsy and on the said date only was it discovered that I had breast carcinoma.

I pause to point out that the service alteration request was attended to and completed on 23 March 2016, and thus nearly a month prior to having been advised of the breast carcinoma. I therefore could not possibly in fact have any knowledge of the condition during the service alteration request of 23 March 2016 and have duly, properly and honestly answered all requested information;

I had at the time of completion of the request also not been diagnosed with any disease or disorder which requires on going treatment nor was any medical investigations or examination scheduled. The consultation with Dr A of 7 March 2016 was simply for advice on a prevention plan – which was still deemed ‘radical’ in South Africa.”

The insurer responded as follows to the above:

“…Dr. A confirms the Complainants awareness of the risk that the BRCA gene carried by her enquiry as to the necessity of undergoing a bilateral prophylactic mastectomy. In the face of the clear questions in the (application form to increase the benefit) she should have told us of this.

We submit that her consultation with Dr A (which was impelled by her concern for her carrier status) was a circumstance that in the estimation of the reasonable and prudent person was apt to be disclosed.”

Discussion

Since an insurance contract is one of good faith, a life assurer, in order to assess the risk, relies almost exclusively on the information provided by the proposer when applying for the insurance.  The proposer is therefore duty bound to voluntarily disclose all material information relevant to the risk that is to be underwritten.  The strict requirement for full and honest disclosure is a fundamental principle of insurance.

It is probable that, had the complainant made full disclosure of her consultation with the general surgeon on 07 March 2016, the insurer would have requested further information before taking a decision as to whether the benefit should be increased.

Our office made a preliminary ruling that there were no legal or equitable grounds on which the insurer could be requested to make any concessions to the complainant.

Result

The complaint could not be upheld.

Interpretation – activities of daily living cover – payable only if full time caregiver is required – meaning of ‘full time’

BACKGROUND

The complainant, a housewife, submitted a claim under the activities of daily work benefit after being diagnosed with chronic urinary retention as a result of bladder outlet obstruction with bilateral pyelonephritis.  She needs to perform clean intermittent self-catheterization every two to three hours.

To qualify for a claim in respect of the benefit, the complainant would, inter alia, have to comply with the following: “The claimant requires full time nursing care or a caregiver as a result of his/her medical condition.”

In her submission to our office the complainant explained as follows:

“My husband and youngest daughter are educators.  They return home daily at 3pm and relieve the helper (3 days in a week).

The days that I cannot afford a helper my niece takes care of me (2 days in a week).

On weekends my eldest daughter and husband who lives with me takes care of me (2 days).”

The following is an extract from a medical report submitted:

“The patient … finds that treatment with clean intermittent self-catheterization is very difficult and requires permanent assistance.  She needs to perform clean intermittent self-catheterization every two to three hours.”

The insurer declined her claim, as she “partially needs a caregiver to help catheterise, however does not require full time care.”

DISCUSSION

Our office wrote to the insurer and expressed the view that the meaning to be given to “full time” must be reasonable.  So, for example, it would be unreasonable to contend that “full time” means every second of the day.

Rather, a reasonable interpretation is to say that if a person requires nursing care or a caregiver to assist her on an ongoing basis for a very significant part of her day, then that would constitute “full time” case for the purposes of the policy.

The insurer did not agree with our view.  However, a meeting of the office’s adjudicators was unanimously of the view that the criteria had been met.

RESULT

A provisional ruling in favour of the complainant was therefore made which the insurer accepted.

Background

1. The complainant advised that he transferred a large sum of money to the insurer on a Thursday. He visited a branch of the insurer’s on the same day and was advised that his timing would allow him to purchase units at the “ruling price / rate of the day”, thus the unit price determined on Thursday.
2. The insurer acknowledged the advice given to the complainant by its consultant, but stated that the advice was unfortunately not correct. Whilst the complainant’s investment was processed on the Thursday before 14h00, the units were purchased the next day (Friday) at a price that was determined at the close of that day (Friday), which was higher than the preceding day.
3. The insurer referred to the policy, which provides that if the instruction is received before the cut off time of 14h00 and all requirements are met, the instruction will be processed on that business day and the client will receive the unit price of the following business day. In other words, if all the requirements were met by 14h00 on Thursday, the units would only be purchased on Friday.
4. The insurer further advised that the unit price for a certain day is only determined at the end of business of that day.
5. The insurer was of the view that the complainant was not treated unfairly, as his investment was processed in the same manner as all other clients who submitted an instruction prior to 14h00 on Thursday.

Determination

6. With regards to the complainant’s request for the insurer to honour the unit price as at Thursday, the office considered its Rule 1.2.4 that states that we must accord due weight to considerations of equity.
7. However, we found that it would not be fair to require the insurer to provide the complainant with the number of additional units which the complainant’s investment would have purchased at the lower closing unit price as at Thursday. It thus follows that there is no equitable reason why the insurer should pay the money value of the additional units.
8. The complainant’s claim was dismissed.

Compensation

9. In terms of our Rule 3.2.5, this office may award compensation, irrespective of the outcome of the complaint, for material inconvenience, distress or for financial loss suffered by a complainant as a result of the insurer’s error, omission or maladministration.
10. The insurer unequivocally apologised to the complainant for misinforming him of the processing timeline and offered compensation of R2 000.00.

Result

The complainant accepted the insurer’s offer and the matter was closed.

Mistake by insurer – beneficiary nomination changed – nomination change not properly effected according to insurer

1. The complainant was one of the two policyholders and beneficiary of the policy applied for which commenced on 1 January 2001. The deceased was the insured life on the policy. When the complainant’s partner resigned from their company, the beneficiary was changed to the deceased’s then wife. The deceased became the new premium payer on the policy. The insurer duly notified the complainant that the beneficiary change had been effected.
2. When the deceased passed away in 2018, the insurer paid the benefit to the complainant and his ex-partner in business at 50% each of the benefit sum, it arguing that since there was no proper change in nomination of the new beneficiary, it was necessary to revert to the original contract. It offered the maximum compensation of R50 000 to the deceased’s wife, which was declined.
3. During the exchange of correspondence between the parties, it was discovered that the erstwhile partner, who had not signed for the change in beneficiary nomination, had written to the insurer indicating his willingness to sign over his share of the policy to the deceased’s wife and had apologized for the burden on the deceased’s family. He requested that his share of the policy proceeds should be used to pay his account with a security company and that the balance thereof should be paid to the deceased’s wife. This information had been communicated to the insurer well before the benefits were paid.

Result

Presented with this information, the insurer agreed to settle the claim by paying to the deceased’s wife the amount which it had paid to the partner, less the account of the security company. The complainant accepted the offer and the matter was finalized.

Discussion

1. The deceased passed away on 02 September 2016. The death certificate reflected the cause of death as “Under Investigation”.
2. The complainant, who is the deceased’s wife, submitted a claim in September 2016. The insurer declined the claim relying on the suicide exclusion clause which reads as follows:
   • During the first 2 (two) years from the Commencement Date, the Insurer will not be liable to pay a benefit if any claim arises directly or indirectly from or is traceable to self-inflicted injuries, suicide or attempted suicide.
3. The insurer relied on the police statement which gave a short description of the circumstances of death as follows:
   • The deceased allegedly drank stameta to clean his stomach and later taken to hospital where he passed on.
4. The insurer also relied on the postmortem report which concluded that the cause of death was consistent with organophosphate pesticide ingestion/poisoning.
5. Stameta is a body healing liquid which is very popular amongst the Black Community. Stameta helps to strengthen the immune system and relieve various conditions such as digestive problems, constipation, lower back and joint pains and fatigue.
6. We pointed out to the insurer that there was no indication that the deceased took anything else other than the stameta. According to the police statement there was no possibility that the deceased committed suicide. It was possible that the deceased was poisoned prior to drinking stameta but there was no evidence that he committed suicide.
7. The insurer’s attempts to obtain an inquest report to determine the cause of death failed. For this reason, they decided to review their decision.

Result 

The benefit was paid accordingly.

Background

1. The insurer and the deceased entered into a policy in terms of which the insured was covered for a funeral benefit of R30 000. The policy commenced on 1 July 2013. It provided that the premiums are payable monthly in advance by debit order on the date agreed to between the parties.
2. The deceased passed away on 13 November 2017 as a result of natural causes. When the complainant lodged a claim against the insurer, it was declined on the basis that the deceased had passed away before the expiry of the six months’ period.
3. The insurer explained that the waiting period arose due to the lapsing of the policy in April 2017. In support of their argument, they averred that there were insufficient funds in the deceased’s bank account in March and April 2017. A statutory notice was sent to the deceased by an SMS in March 2017 advising that her policy was in arrears and that a double premium would be debited on 2 April 2017.
4. The double premium was also not received. A second notice was allegedly sent by an SMS to the deceased advising that her policy had lapsed.
5. At reinstatement stage, the deceased advised the consultant who assisted her that she was surprised that her policy had lapsed as she had consistently deposited an amount of R120.00 into her bank account on a monthly basis whilst the monthly premium was R107.60. She denied receiving the SMS messages that were allegedly sent to her because she had lost her cell phone a long time ago.
6. The insurer agreed to reinstate the policy subject to the payment of the arrear premiums (because the deceased was over 64 years and therefore was not eligible for cover) and the waiting period of six months. The policy was reinstated with effect from 4 September 2017.
7. The complainant, aggrieved about the insurer’s decision, approached our office for assistance.

Discussion

8. We examined the deceased’s bank statements and found that there were insufficient funds in her bank account as she made cash deposits of R120.00 each month. It appeared that the money was consumed by the bank charges.
9. The case law dealing with statutory notices in terms of section 52 of the Act states that the very function of the notice is to alert the policyholder so that within the grace period, the default can be remedied. We were not satisfied with the way in which the insurer communicated with the deceased because an SMS can inadvertently be deleted and it can easily escape one’s attention. In our view the proper business method of communication would be to confirm important messages to the policyholder by means of a written letter (or email where possible) whether or not registered.
10. We pointed out that cell phones get stolen or lost from time to time. It followed that the insurer should, at the very least, have contacted the policyholder telephonically to ensure that the number was still working before sending the SMS.
11. It was clear from the bank statements provided to us that had the deceased received the notice, she would have remedied the default as she had made regular payments to her bank account. She was failed by her ignorance about how the bank account works. She just made sure that she paid an amount of R120 regularly to cover, as she thought, the debit order of R107.60 without realising that the bank charges would be much more than expected.
12. We concluded that the insurer should honour the complainant’s claim and pay the benefit less the arrear premiums, based on our equity jurisdiction. A provisional ruling was issued in this regard.
13. The insurer objected to our provisional ruling, relying on section 11 and 12 of the Electronic Communications and Transactions Act, 25 of 2002, and contended that data messages are legally recognised in terms of the law.
14. Moreover, it was argued that an interpretation to the effect that the insurer must ensure that the policyholder becomes aware of the non-payment of the premium, would place an onerous obligation on the insurer.
15. We obtained a legal opinion which concluded that the insurer did not comply with its obligation in terms of section 52(1) of the Long-term Insurance Act to notify the insured of the non-payment of the premiums by merely sending an SMS to the mobile number provided by the insured to the insurer, without obtaining proof that the insured received the notification.

Background

1. The complainant took out a funeral plan covering the deceased as a parent for a benefit of R10 000. The policy commenced on 1 October 2015.
2. The deceased passed away on 26 January 2018. The complainant lodged a claim against the insurer which was repudiated on the basis that the premiums were in arrears.
3. The relevant material terms of the policy contract were as follows:
   1. The premiums are payable in advance and are due on the first day of each month.
   2. There is a grace period of 30 days to pay the arrear premium.
   3. If any premium is not paid within the grace period, the policy will lapse and become null and void.
   4. Once the policy has lapsed, it may within 3 months of the date of lapse be reinstated with no waiting period except for the remainder of the original waiting period, if any. Arrear premiums may be recovered from the proceeds of the claim.
4. There was no dispute that the complainant failed to pay the premiums on the first day of November and December 2017. She only made a cash payment on 21 December 2017 but also failed to pay the premium in January 2018. She was notified about such failure on both occasions and was warned that “No claim will be acknowledged should the premiums be in arrears or if the policy lapses”.
5. The complainant, aggrieved about the insurer’s decision, approached our office for assistance.

Discussion

6. After considering the evidence before us, we took note that had the insurer enforced the provisions of the policy contract, the policy would have lapsed after the expiry of the grace period. The complainant would then have had a right to reinstate the policy with no waiting period and arrear premiums would have been recovered from the proceeds of the claim.
7. We held that the insurer had breached the provisions of its own policy. Such breach prejudiced the complainant because she was deprived of her right to reinstate it, which would have been more favourable for her.
8. The insurer’s contention that it had warned the complainant about the consequences of non-payment of the premiums was noted. However, the fact that it had not followed its own procedure as prescribed in the policy was regarded as material.
9. In view of the above, it was decided that the payment of the December premium should be construed as the reinstatement of the As the complainant also failed to pay the premium in January 2018, the grace period would apply from 1 to 30 January 2018. As the  deceased died on 26 January 2018, we held that she had died  within the grace period.
10. A provisional ruling was made directing the insurer to honour the claim and pay the benefit less the arrear premiums.

Result

11. The insurer decided to abide by our decision and paid the claim accordingly.