CR389 Compulsory life annuity; commutation of monthly income payments

by AnnuitiesCase ReportsTopics & Cases

CR389

Compulsory life annuity; commutation of monthly income payments

Compulsory life annuity – beneficiaries seeking lump sum payment instead of monthly income payments after death of annuitant before guarantee date  – insurer stating that policy could not be commuted – whether there was any legislative or contractual impediment to payment of lump sum

Background

1. The complainant lodged a complaint on behalf of himself and his three siblings.  Their mother had been the annuitant on a compulsory guaranteed income annuity policy, and they were the beneficiaries.  After the annuitant’s death, the insurer commenced paying the monthly income to the beneficiaries.  They each received about R110 per month, and this was set to continue for the next sixteen years, until the guarantee date.  The beneficiaries felt that this “makes no sense” and they wanted the insurer to pay each of them a commuted lump sum instead.

2. The insurer stated that “the annuity cannot be commuted and we are unable to pay the full lump sum due to the restrictions on this type of policy”. 

3. The insurer quoted a clause in the policy summary which stated:

“If the annuitant dies before the guarantee date, the annuity will be paid to the nominated beneficiaries until the guarantee date, after which the annuity will end”.

4. The insurer also stated that there were other restrictions indicated on the policy document.  The insurer referred to a clause, also in the policy summary, which read:

“Restrictions

This annuity cannot be surrendered, commuted, ceded or pledged.”

Discussion:

5. We pointed out firstly that there was no legislative impediment which prevented the benefit being paid as a lump sum, after the death of an annuitant (who dies before the expiry of the guarantee term).

6. We asked the insurer to provide us with a full copy of the actual policy terms and conditions, not just the policy summary.  The policy terms and conditions would apply if there were any discrepancies between it and the policy summary.

7. The clauses in the actual policy terms and conditions were not the same as in the policy summary on which the insurer was relying.

8. The policy simply stated, under “Beneficiary”:

“The Annuitant may at any time appoint a beneficiary to receive any proceeds that might be due on death of the Annuitant/s if death occurs before the Guarantee Date”,

9. We pointed out that this did not appear to preclude payment of the proceeds in the form of a commuted lump sum (which would of course be subject to tax). 

10. The policy further stated, under “Cession”:

“The Annuitants right to benefit in terms of this policy shall not be capable of surrender, commutation or assignment or of being pledged as security for any loan”. 

11. We pointed out that this applies to the Annuitant, stipulated in the policy by name; it does not apply to beneficiaries.

12. We mentioned to the insurer that in our experience if the contract did not prohibit the payment of a commuted lump sum, other insurers were prepared to offer a discounted lump sum instead of the annuity.  We asked the insurer to reconsider the matter.

Result:

13. The insurer agreed to pay each of the beneficiaries a commuted lump sum.

CR26 Funeral Insurance – dubious claims

by Case ReportsFuneral InsuranceTopics & Cases

CR26 Funeral Insurance – dubious claims.
The complainant, who was also the policyholder and the premium payer, insured the life of Ms A under two group scheme funeral policies with company X. Both policies were applied for telephonically through the company’s telemarketing department. When Ms A died and the insurer failed to meet the complainant’s claim, she referred her complaint to us. The company responded:

(i) that, on listening to the recording of the applications for insurance, the policyholder described herself in the one case as the life assured’s daughter and in the other as her step-sister;

(ii) that there was a significant discrepancy between the surnames of the life assured on the submitted death certificate and identity document;

(iii) that a quotation from the funeral undertaker supplied by the complainant in support of the claim had been tampered with;

(iv) that no payment had in fact been made to the undertaker who buried Ms A;

(v) that it would appear that premiums were deducted from the complainant’s banking account in respect of other policies covering various people’s lives; and,

(vi) finally, that the complainant could not furnish convincing proof of the family relationship existing between herself and the deceased.

The company chose to repudiate liability on the narrow ground that an insurable interest had not been proven, in consequence of which all premiums were refunded to the premium holder.

Confronted with this array of potential defences the policyholder chose not to respond. Our file was accordingly closed. This was yet another of several instances where a complainant, faced with an insurer’s explanation to the complaint lodged with us, chose, instead of pressing on with the complaint, to beat a prudent retreat.

PMN

CR34 Interpretation – loan protection insurance

by Case ReportsInterpretationTopics & Cases

CR34

Interpretation – loan protection insurance – retrenchment cover – interpretation of term “retrenched” and date of retrenchment – exclusion where person had knowledge of retrenchment prior to commencement date or retrenched within three months of retrenchment date.

This case required an interpretation of the term “retrenched” and a determination of the date of retrenchment, with reference to labour law.

The complainant had a housing loan protection policy which included retrenchment cover. The policy stated that “The insurer will regard the insured person as retrenched if termination of employment complies with the legal termination of the insured person’s employment by reason of retrenchment, provided for in the Basic Conditions of Employment Act and the Labour Relations Act”. No retrenchment benefit would be paid to “any person who had knowledge of retrenchment prior to the commencement date, or who is retrenched within three months of the commencement date”.

The policy commencement date was 29 April 2003. On 23 June 2003 the employer gave the complainant a letter headed “Notice to terminate employment”. The letter indicated that the company was under financial strain and that certain staff positions needed to be reduced. The complainant was invited to make representations about her position, and told that options short of retrenchment would be discussed and considered. It was stated that, should no suitable vacancy or other alternative exist, her last working day would be 31 July 2003.

As it turned out, no alternative was found and her last working day was indeed 31 July 2003. The insurer declined the complainant’s claim for the retrenchment benefit on the basis that her retrenchment date was 23 June 2003 (the date of the letter), which fell within the three month period from commencement of the policy.

Establishing the date of retrenchment is a matter of fact and law; the date must be determined with reference to the relevant provisions of the Labour Relations Act.

A retrenchment is a type of dismissal, known as a dismissal for operational requirements; for reasons related to the needs of the business, employees’ positions have become redundant. Section 190 of the LRA fixes the date of dismissal as being the earlier of the date on which the contract is terminated, or the date on which the employee left the service of the employer.

When termination is on notice, the contract ends on the last day of the notice period, since this is the date on which the parties’ obligations under the contract cease.

Section 187(3) of the Labour Relations Act requires an employer contemplating retrenchment to issue a written notice inviting the other party to consult and to disclose in writing all relevant information. The proper procedure would be to go through a process of consultation and then, once a decision has been made to retrench, to give notice of dismissal.

The notice given in this case to the complainant on 23 June 2003 does not constitute a retrenchment. It is an attempt to afford prior notice of retrenchment to the employee, while at the same time giving notice that, if alternatives fail, the contract of employment will terminate on 31 July 2003. The fact that these stages were collapsed into one here does not alter the fact that the date of dismissal for operational requirements (retrenchment) was, in terms of section 190(1), 31 July 2003, since this was the date on which, alternatives having failed, the contract terminated, and it was the date on which the employee left the service of the employer.

We advised the insurer that, since the complainant had no knowledge of the retrenchment prior to the commencement date of the policy, and since the date of retrenchment fell outside of the three month period stipulated, no exclusion applies and she qualifies for the retrenchment benefit in terms of the policy. The insurer settled the claim.

SM

CR58 Cession of insurance policy as security for a debt to a bank

by Case ReportsCessionTopics & Cases

CR58

Cession of insurance policy as security for a debt to a bank – bank redeemed debt – – insurer erroneously overpaid the bank as cessionary which credited the account of the insured with the excess payment – question whether insured was unjustly enriched at the expense of the insurer or the bank

Background

The complainant had ceded her life assurance policy to a bank in order to secure an existing debt. The bank surrendered the policy, as it was entitled to do, and requested payment from the insurer. The insurer erroneously paid to the bank the proceeds of the complainant’s policy together with the proceeds of another policy not belonging to her. The bank compounded the problem by deducting the amount required to cover the debt from the combined proceeds of the two policies and thereafter crediting the complainant with the balance being an amount of R14 150. When the insurer realised the error the insurer claimed from the complainant repayment of the overpaid amount alleging that the complainant had been unjustifiably enriched. The complainant alleged that when she discovered the amount with which she had been credited she had enquired from both the insurer and the bank whether the amount was correct and both had confirmed the correctness thereof. The complainant alleged that she had in the meantime spent the money. The insurer and the bank both denied that any of their employees had assured the complainant that the amount as paid into her bank account was a correct payment.

Discussion

An enrichment action would only lie against the actual recipient of the monies wrongly paid. Our office took the position that the insured had paid the bank, as cessionary of the policy, the proceeds of the policy on the bank’s instruction with the result that the bank was the real recipient of the payment. The fact that the bank had thereafter credited the complainant’s bank account with an incorrect amount was the fault of the bank and a matter between her and the bank. The insurer therefore had to reclaim any overpayment from the bank and not from the complainant. The insurer contended that the bank had received the amount paid by the insurer as agent for the complainant and that the complainant was therefore the recipient of the excess money paid by the insurer. For this proposition we could not find any authority. We made a provisional ruling that the insurer had no claim based on unjust enrichment against the complainant because she could not be regarded as the actual recipient of the money paid by the insurer to the bank as cessionary. We suggested that there was a possibility that once the insurer had successfully reclaimed payment from the bank the bank in turn would have a claim against the complainant.

Result

The insurer was initially not disposed to accept our ruling, but eventually, albeit reluctantly, it accepted our ruling, whereupon the bank ceded to the insurer its right of action against the complainant, to recover the overpayment.

MFBR
October 2005

CR380 Policy Exclusion: death due to participation in criminal act

by Case ReportsExceptions, Exclusions And Waiting PeriodsTopics & Cases

CR380

Policy Exclusion: death due to participation in criminal act

Accident – Deceased hit by a train while allegedly walking on a railway line – Reliance by insurer on exclusion for death as a result of active participation in criminal act – Reference to Section 12(i)(h) of Schedule 1 of the Legal Succession to the South African Transport Services Act 9/89.

Background:

1. The deceased person was killed when he was struck by a train (“the incident”).

2. At the time of incident at approximately 05h15am:

  • The deceased was a pedestrian
  • A Metrorail train was en route to Umhlali

3. The incident occurred at a place at or near or along the railway line which, in the statement of the witness was only described as “126/391” and which, according to that statement, was the “precise place” where the incident occurred.

4. In the statement, the witness said this referring to the deceased: “To my knowledge the person had no authority to be present at the mentioned place and in my opinion, there was nothing that I or my employer could do to avoid the incident”.

5. There is no other relevant information about the incident, save for the following statement by the investigating officer of the South African Police: “The deceased was walking along the railway tracks at Shaka’s kraal when he was knocked down by a train travelling in his direction.”

6. The insurer justified its repudiation of the claim for the funeral policy benefit as follows:

  • “It is confirmed that the direct cause of death of the deceased was due to illegal railway line crossing.
  • The illegal crossing of a railway line is criminalised in terms of the following provision from the Legal Succession to the South African Transport Services Act 9 of 1989:

A “person who crossed a railway line without the authority of the Company of the Corporation, as the case may be, at a place where a level crossing or pedestrian crossing has not been constructed; shall be guilty of an offence and on conviction any competent court may impose, in its discretion, a fine or imprisonment, or a fine and imprisonment, or any other suitable punishment within its jurisdiction.”

  • It is confirmed by the investigating officer that the deceased was hit by a train whilst walking on the railway line.

Discussion

The matter was discussed at a meeting of the adjudicators. The meeting noted the following:

7. The insurer bore the onus of proof of the criminal act on which it relied for its repudiation of liability in terms of the policy.

8. According to the insurer, the deceased committed the offence set out in the second paragraph quoted in paragraph 6 above.

9. The following were the factual errors in the insurer’s letter, quoted in paragraph 6 above:

  • There was no evidence that, at the time of the incident, the deceased was in the act of an “illegal railway line crossing”.
  • The investigating officer did not say that the deceased was hit whilst walking on the railway line.
  • There is no evidence of the fact that the deceased’s death arose while illegally crossing a railway line.

10. The offence in question can only be committed by a person

  • Who crosses a railway line and
  • At a place where there is no level crossing or pedestrian crossing

11. There was no evidence:

  • that the incident occurred while the deceased was crossing a railway line or
  • that the incident occurred at a place where there was no level crossing or pedestrian crossing.

12. The witness’s evidence and that of the investigating officer did not prove the commission by the deceased of the alleged criminal act.

13. It was a unanimous finding of the said meeting that the insurer did not discharge the said onus and that it was liable for the payment of the said benefit.

14. The insurer accordingly paid the claim.

CR381 Loss of income claim – Covid19 – is a TERS/UIF payment considered “income” in terms of the policy definition

by Case ReportsCOVID 19/TERSRetrenchmentTopics & Cases

CR381

Loss of income claim – Covid19 – is a TERS/UIF payment considered “income” in terms of the policy definition

Background:

1. The policy commenced on 27 November 2017, after the National Credit Act (NCA) Regulations of August 2017 were promulgated.

2. The Policy stated:

If you become Unemployed or if you are Unable to Earn an Income during the period of insurance, other than as a result of Disability, we will pay all your obligations under the Credit Agreement that become due and payable:

  • For a period of 12 months from the date you became Unemployed or Unable to Earn an income;
  • During the Remaining Repayment Period; or
  • Until you become employed or are able to earn an income, whichever is the shorter period.

3. “Unable to Earn an Income” was defined as:

Unable or Inability to Earn an Income means you are incapable of earning an income from any occupation, work, job or business for any reason other than Disability.

4. Relying on the definition above as read with the NCA Regulations, the insurer contended that there had to have been a 100% loss of income for a claim to succeed.

5. For the months of April 2020 and May 2020, the complainant did not receive her monthly salary from her employer due to the Covid-19 pandemic. As a result, she received a benefit from the Temporary Employee/Employer Relief Scheme (TERS) for the months of April 2020 and May 2020.

6. The insurer argued that the benefit payments received from the TERS for the months of April 2020 and May 2020 constituted income earned and the complainant therefore did not suffer a 100% loss of income as required by the policy for her claim to succeed.  

Discussion:

7. The question that arose was whether the payments which the complainant received in terms of TERS for the months of April 2020 and May 2020 constituted income earned ‘from any occupation, work, job or business for any reason other than disability’.

8. The matter was discussed at an adjudicators’ meeting.

9. The meeting noted that the policy did not define “income” or “income earned”.  The meeting therefore considered the ordinary meaning of “income earned” and/or “earned income”.

10. The Collins English Dictionary defines “earned income” as “income derived from paid employment and comprising mainly wages and salaries”. 

11. The Cambridge Dictionary defines “earned income” as “money that a person or company receives for work they have done, including wages, tips, commissions, and bonuses, but not income from investments”. [Emphasis added]

12. The meeting also considered the TERS Directive issued on 26 March 2020 by the Minister of Employment and Labour, the amendments thereto, as well as legal opinions that had been obtained by the insurer and this office.

13. When one interprets parts of a document, those parts cannot be read in isolation. As Wallis JA said in Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] 2 All SA 262 (SCA) at 271 and 273:

“The present state of the law can be expressed as follows.  Interpretation is the process of attributing meaning to the words used in a document, be it legislation, some other statutory instrument, or contract, having regard to the context provided by reading the particular provision or provisions in the light of the document as a whole and the circumstances attendant upon its coming into existence.  Whatever the nature of the document, consideration must be given to the language used in the light of the ordinary rules of grammar and syntax; the context in which the provision appears; the apparent purpose to which it is directed and the material known to those responsible for its production.  Where more than one meaning is possible each possibility must be weighed in the light of all these factors.  The process is objective not subjective.  A sensible meaning is to be preferred to one that leads to insensible or unbusinesslike results or undermines the apparent purpose of the document.  Judges must be alert to, and guard against, the temptation to substitute what they regard as reasonable, sensible or businesslike for the words actually used.  To do so in regard to a statute or statutory instrument is to cross the divide between interpretation and legislation.  In a contractual context it is to make a contract for the parties other than the one they in fact made.  The “inevitable point of departure is the language of the provision itself”,read in context and having regard to the purpose of the provision and the background to the preparation and production of the document.”

Interpretation of the TERS Directives:

14. The preamble of the TERS Directive issued on 26 March 2020 (hereinafter referred to as “the March TERS Directive”) states:

“During this period of lockdown, companies will have to shut down and employees laid off temporarily.  This means that employees are compelled to take leave, which is not out of choice.  We therefore anticipate that employees may lose income.  Employers are encouraged to continue to pay employees, but where this is not economically possible; we have created a special benefit under the Unemployment Insurance Fund as per the Directive Covid-19 Temporary Employee / Employer Relief Scheme.” [Emphasis added]

The purpose of the March TERS Directive is stated as:

“2.1.1   To make provision for the –

  • Payment of benefits to the Contributors who have lost income due to Covid-19 pandemic;
  • …
  • …
  • Establish the Temporary Employee / Employer Relief Scheme and set out the application process for benefits of the Covid-19 pandemic and to alleviate economic impact of Covid-19;

2.1.2    To make provision for online applications for benefits in order to avoid contact during the national disaster period.” [Emphasis added]

Clause 5 of the March TERS Directive states:

“5.        Application Procedure

            …

            5.3       An employee who is being paid by the employer during this

 period is not entitled to this benefit.” [Emphasis added]

The March TERS Directive does not refer to income earned but instead makes reference to a “benefit” or “benefits” or “special benefit”.

This was significant.

15. Clause 5.3 of the March TERS Directive was then amended by the TERS Directive issued on 11 August 2020 (hereinafter referred to as “the August TERS Directive”) as follows:

“5.3      Subject to the amount of the benefit contemplated in clause 3.5, an employee may only receive Covid-19 benefits in terms of the Directive if the total of the benefit together with any remuneration paid by the employer for work performed by the employee in any period is not more than the remuneration that the employee would ordinarily have received for working during that period.” [Emphasis added]

The August TERS Directive also did not refer to income earned but instead made reference to a “benefit” and “remuneration”.

Significantly, the August TERS Directive distinguished between the TERS benefit and remuneration paid by the employer to the employee by defining “remuneration” to mean:

“ “remuneration” bears the same meaning as the definition of the term in the Basic Conditions of Employment Act, 1997 (Act No. 75 of 1997) read with section 35(5) of that Act and the Schedule to Government Notice 69, GG 24889 of 23 May 2003”

Therefore, the definition of “remuneration” in the August TERS Directive meant, as per the Basic Conditions of Employment Act, 1997 (Act No. 75 of 1997):

“… any payment in money or in kind, or both in money and in kind, made or owing to any person in return for that person working for any other person…” [Emphasis added]

It followed that the August TERS Directive construed the TERS ‘benefit’ separately from the employee’s ‘remuneration paid by the employer for work performed by the employee’.

SARS treatment of TERS:

16. Unlike income earned, TERS benefits are exempt from tax as directed by the South African Receiver of Revenue (SARS), in its memorandum to employers dated 11 September 2020 wherein it was stated:

Income code 3724: Employees must use this code to declare any payments received by their employees from a COVID-19 Disaster Relief Organisation. These payments do NOT include payments received from the Unemployment Insurance Fund (UIF) Temporary Employees Relief Scheme (TERS).

Payment from the UIF TERS are exempt from tax and must not be reflected on the IRP5/IT3(a) certificate issue by employers to their employees.

Sources of funds for TERS payments:

17. The source of funds for the TERS benefit is the National Disaster Benefit Fund and not the employer.  If an employer cannot pay his employees due to the pandemic, it makes application to the National Disaster Benefit via the UIF. The employer is merely a conduit for payment of the TERS benefit.  The payment of TERS by the employer, does not convert the TERS benefit, payable via the UIF, to income paid by the employer for services rendered.

Conclusion:

18. In summary:

  • the TERS benefit is a benefit created by statute and not income earned from any occupation, work, job or business and/or remuneration paid to an employee for services rendered;
  • the source of funds for the TERS benefit is the National Disaster Benefit Fund;
  • the source of funds for the TERS benefit is not the employer in terms of a contract of employment;
  • TERS is a benefit paid via the UIF from the funds of the National Disaster Benefit Fund, not from the employer’s coffers;
  • the employer’s role with regards to TERS is, at best, that of a payment agent;
  • the ordinary meaning of “earned income” and/or “income earned” in the context of income earned for services rendered / work done, cannot mean passive income from TERS.

19. In light of the above, the meeting agreed that the TERS benefit did not constitute income earned and therefore could not be considered in the assessment of the complainant’s claim.

20. The meeting was also of the unanimous view that the conclusion reached above was in accordance with the principles of fairness and equity as applied by the office.

Result:

21. The insurer accepted our view and paid the loss of income claim.

CR382 Mistake, lapsing, reliance, reinstatement

by Case ReportsReinstatement of Policies or BenefitsTopics & Cases

CR382

Mistake, lapsing, reliance, reinstatement

Lapsed policy – insurer informing policyholder that if arrears paid the policy would be reinstated, and mistakenly advising that this would be without underwriting if reinstatement took place before a mentioned date – policyholder paying arrears before mentioned date – insurer invoking its mistake – policyholder entitled to enforce contract on basis of reasonable reliance.

Background:

1. The policyholder had a “key person” policy on the life of an employee.  Premiums for October and November 2017 were paid late, after the thirty day grace period. 

2. On 25 November 2017 the insurer sent the policyholder a letter advising that “Your policy has lapsed (been cancelled)”.  The letter also advised that “you may be able to reinstate the policy within 6 months”.  It stated further:

“You may be able to reinstate your policy

If you decide to pay the arrear premiums, the policy may be reinstated depending on [the insurer’s] underwriting requirements at that time.

Please speak to your financial adviser or call us to discuss your options.  You will need to apply for reinstatement within 6 months of the date of this letter”.

3. The policyholder requested that the policy be reinstated.  On 29 November 2017 a letter was sent to the policyholder’s broker (agent for the policyholder) stating as follows:

“The total outstanding amount (December 2017 premium included) is R1 479.76 to reinstate the policy without formalities.  Should the policy be reinstated after the 28th February 2018, the reinstatement will be subject to underwriting assessment”.

4. A similar letter was sent on 8 December 2017.

5. The policyholder paid the outstanding amount of R1 479.76, which included the premium for December, on 20 December 2017. 

6. The insurer then stated that it made an error in offering to reinstate the policy without formalities.  It insisted that the life insured be underwritten again before it would reinstate the policy.  The policyholder complained to our office.

Discussion:

7. We noted that the policy is silent on the issue of reinstatement.  This means that there is no right to reinstatement flowing from the policy.  An agreement on reinstatement would thus have to be reached between the parties.  There would have to be an offer and an acceptance, to constitute a binding agreement (a contract).

8. The letter sent on 29 November 2017 (paragraph 3 above) appears to be a clear offer by the insurer to reinstate, without formalities, if the total outstanding amount is paid.  The time within which payment must be made for reinstatement without formalities is not made as clear, but the implication is that it should be before 28 February 2018.

9. The policyholder paid the total outstanding amount of R1 479.76, which included the premium for December, on 20 December 2017.  In doing so the policyholder indicated acceptance of the insurer’s offer.

10. The insurer then stated that it made a mistake in offering to reinstate the policy without formalities.

11. This mistake would be regarded as causal, since according to the insurer it intended to contract on different terms, ie on the basis that underwriting would be required.  The mistake is material (essential), since it led to dissensus between the parties on a material term of the contract.

12. An essential mistake in principle means that a contract is invalid (void ab initio), because of the lack of subjective agreement. 

13. Contractual invalidity in this situation may be seen as unfair to the other party, if he reasonably believed that there was a valid contract, and the reasonable reliance approach may then come into play.

14. In accordance with the reasonable reliance approach, it must be asked whether the policyholder (the non-mistaken party) reasonably believed that there was subjective consensus between the parties.  If so, he should be able to enforce the contract despite the insurer’s mistake.  In terms of the reasonable reliance theory, the contract will be valid if the mistaken party (the insurer) created the impression that it subjectively agreed to the contract; and there was reliance on this impression by the non-mistaken party; and the reliance was reasonable.

15. In this case the insurer created the impression that it would reinstate the policy without underwriting/formalities if the arrears were paid before 28 February 2018.  The policyholder relied on this impression, paid the arrears on 20 December 2017, and attempted to pay subsequent premiums.  In our view the policyholder’s reliance in this case was reasonable.  We stated our view that the insurer should be held to the contract.

Result:

16. The insurer reinstated the policy without underwriting.

CR18 Death claim rejected due to insurer’s reliance on pre-existing exclusion clause

by Case ReportsTopics & Cases

CR18

Background

The deceased’s credit life policy commenced on 6 June 2002. He died on 2 August 2002 as a result of cardiac arrest.


The insurer declined the claim due to its reliance on the pre-existing exclusion clause featuring in the policy terms and conditions. It stated that the deceased had suffered from diabetes mellitus prior to the commencement of the policy which contributed to the cause of death.


The office initially supported the insurer’s decision and the executor of the estate accepted the decision. The deceased’s son however did not accept our decision on the basis that he alleged that his father was never diagnosed with diabetes mellitus.


Assessment

In support of its decision, the insurer initially submitted a PMA report from the deceased’s doctor who confirmed at the outset that diabetes mellitus was diagnosed on 2 May 2002 and that diabetes mellitus contributed to the cause of death. Such a diagnosis was subsequently denied.


Further medical information revealed that, one month prior to his death, the deceased suffered from symptoms of high blood sugar and a fingertip test was done indicating a glucose reading of 12mmg/ml. A change in diet was recommended at this stage. A day before the death the glucose reading was 4mmg/ml.

Further information received at dale of death stated that the immediate cause of death was cardiac arrest with aorta aneurysm and arteriosclerosis as underling causes of death. The insurer advanced that diabetes is a known risk factor for Arteriosclerosis.


In view of the conflicting medical information and the medical nature of the complaint, the matter was referred to an independent specialist for an opinion. The specialist upheld that, on a balance of probabilities, diabetes mellitus was a contributory cause of death. He advanced that this decision firstly required a diagnosis of diabetes mellitus before the commencement of the policy. This was confirmed by the deceased’s doctor reporting that symptoms of high blood sugar were experienced a month before the commencement date. Secondly, he reported that diabetes mellitus is a known risk factor in coronary thrombosis as well as arterial disease elsewhere in the body.
The insurer’s decision was upheld.

AR