CR384 Delay in payment; interest; in duplum rule


Delay in payment; interest; in duplum rule


1. The policy commenced on 1 July 1995. It covered life, capital disability and a double accident (as defined) benefit each at R48 176.

2. The life insured Mr. V, a Police Officer, passed away as a result of a gunshot wound to the head on 27 January 2000.

3. The beneficiary, the deceased’s brother, also, Mr. V submitted a claim and was paid the life cover benefit of R56 892.32 on 12 April 2000.

4. The information at the disposal of the insurer indicated that the death was as a result of suicide and they declined the double accident benefit. However, new information was submitted later on 6 September 2018 and on 11 September 2018 the insurer paid the beneficiary the double accident benefit of R48 211.32, which included interest of R35.32.

5. One of the issues that had to be determined was the consideration of interest on the delayed payment of the accident benefit. The insurer was alerted in this regard to paragraph 23 of the revised practice note on the payment of interest as follows:

“The foundation of Rule 3.2.6 is equity. When the issue of interest arises as a result of late payment, considerations similar to unjustified enrichment could be indicative of where the equities lie. Where the insured/beneficiary has a claim that became due on a particular date, but payment of the claim is deferred, the effect is that the insurer enjoys the benefit of the use of the money due to the insured/beneficiary at the expense of the latter.”

6. The complainant was aggrieved about the interest of R35.32 citing that his brother had passed away in 2000 and the accident benefit was only paid in 2018, while the insurer’s argument was that they only became aware that the cause of death was an accident and thus that a double benefit was due, as opposed to suicide, in September 2018 after which they made payment within a week.

7. Our office did a provisional ruling dated 26 August 2019 finding that the insurer should pay interest on the accident benefit, with effect from 1 April 2000, when the claim for the life cover benefit was finalized, as the insurer had the use of the funds. The interest amounted to R104 297.06 according to a calculation submitted to our office by the insurer on 23 July 2019 but later retracted as not applicable in this matter. 

8. The insurer made further submissions in terms of the provisional determination, offering 50% of R104 000 and citing the in duplum rule, that, in their opinion applied, whereby the interest component should be capped to the (outstanding) capital amount. The offer was a settlement amount of R52 000to be paid on an ex-gratia basis.

9. The complainant declined the settlement offer.

10. The office decided to obtain an independent legal opinion on the application of the in duplum rule on interest on benefits, as opposed to interest on loans.

11. The legal opinion concluded that interest should be capped at the capital amount of the benefit.

12. The matter was submitted to an adjudicators’ meeting where it was decided as follows:

  • The ex-gratia offer of R52 000 made by the insurer was reasonable.
  • Our office agrees with the legal opinion provided to our office by an independent legal consultant that, with application of the in duplum rule, the offer exceeds the capital benefit, and that the interest due, whether in mora or not, had stopped accruing when it reached the capital amount.
  • As the amount offered is in excess of the capital amount, the dates from when the interest should run is deemed irrelevant.

13. The complainant expressed that he remained aggrieved that the interest did not run from date of death but accepted the office’s decision. He was paid R52 000 in interest and the file was closed.

CR177 Delay – complainant instituting a claim against a policy after the surrender


Delay – complainant instituting a claim against a policy after the surrender/lapse of the policy concerned


More or less the same point surfaced in two recent cases.

In the first case the complainant’s policy offered life, accidental death and occupational disability cover. In June 2000 the complainant was shot and injured. In August 2001 he surrendered his policy. In June 2006 he lodged a disability claim with the insurer and, when it was declined, with the office, his explanation being that it was only then that he was in a position to prove that he was fully disabled as required in terms of the provisions of the policy. Had he submitted his claim before surrendering the policy he would not have qualified, so he contended, as being permanently disabled.

In the second case the complainant’s policy also offered occupational disability cover. In January 1998 the complainant was injured in a motor vehicle accident. The policy lapsed in December 1999. In February 2006 the complainant lodged a disability claim with the insurer.


It was the view of our office that in each case there were two insurmountable obstacles to the complainants’ chances of success: first, the surrender or lapse of the policies, and secondly, the inordinate delay before the complainants lodged their claims both with the insurers and with us.

As to the first obstacle we postulated two scenarios: the complainants either had accrued claims before the surrender or lapse the policies or they had not.

If one accepts the first scenario, namely that the complainants had accrued claims in terms of their policies prior to the surrender/lapse thereof, the insurer would have been entitled to rely on our rule 2.2.3 since three years or more had lapsed from the date on which the complainants became aware or should reasonably have become aware that they had cause to complain to the office.

We took note of the reasons advanced by the complainants for not instituting their claims in time (e.g. that they were in no mental state to prove anything to anyone, that they were in a situation of extreme diminished capacity, and that they were suffering trauma). However sympathetic one may feel towards the complainants, we did not regard the reasons given to be sufficient explanations for the long delay, the better part of six years, before their complaints were lodged with the office.

Turning to the second scenario, the complainant, in the first case, argued that he only become permanently disabled (as contemplated by the policy) in June 2006 and that he could accordingly not prove permanent disability in terms of the policy.

In the second case the complainant argued that he only became aware of the permanence of his disability in March 2003 and hence could not have lodged a claim prior to that date. What both complainants were in effect saying was that they did not have accrued claims prior to the surrender/lapse of their respective policies and therefore could not have lodged claims with the insurer at the time.

We argued that if neither had an accrued claim prior to the surrender/lapse of their policies and their claims only conformed to the critical definitions therein after the surrender or lapse of the policies, it would follow that the insurers, because the policies had earlier come to an end, were no longer at risk when their claims finally accrued; consequently the insurers were not liable for the claims for disability benefits. The fact that the incidents that gave rise to the claims took place when the policies were still in force was not conclusive for determining liability on the insurer’s part. The complainants had to have had valid claims in terms of the policy definitions at a time when the insurers were still at risk for liability to ensue.


Since the complainants did not have valid claims prior to the termination of their policies (as by their own admission, permanence of the disability could only be established thereafter), the insurers were justified in denying liability for the disability claims which only arose when the insurers were no longer at risk. Both complaints were accordingly dismissed.

November 2006

CR178 Delay – late submission of claim – equity jurisdiction


Delay – late submission of claim – equity jurisdiction – funeral insurance


The deceased, who died on 11 November 2004, was the policyholder and life insured of a policy offering funeral cover for R10 000.

The policy stated:

“Upon the death of any person insured under the policy, notice of the claim together with all the necessary supporting documentation required by Insurer X must be sent to Insurer X within 6 (six) months of the date of death. No claim, where documentation is submitted after 6 months of the date of death, will be paid.”

The deceased’s family was unaware of the existence of the policy and were only alerted when they received a cancellation letter addressed to the complainant and dated 14 March 2005. The deceased’s mother-in-law then lodged a claim on 8 June 2005. The insurer, relying on the clause in the policy, repudiated it as the claim should have been made by 10 May 2005 at the latest.

The attorneys who complained to our office on behalf of the deceased’s mother-in-law were the executors of the deceased estate. They contended that the time bar should only commence from the moment the family received notice of the policy and that the family should not be penalised by a provision of which they were unaware.


Without agreeing with that submission but taking into account the guidelines set out in the practice note referred to earlier, we were inclined to think that fairness to both parties required that our office should exercise its equity jurisdiction in favour of the complainant. We put this suggestion to the insurer and invited their comments.


The insurer, having given the matter due consideration, thereupon decided to admit the claim.

November 2006

CR179 Delay – late notification of complaint


Delay – late notification of complaint

Occasionally the Ombudsman receives complaints where the act or omission giving rise to the complaint occurred many years before. In the majority of such cases prescription applies. In addition the Ombudsman’s Rules feature a qualifying time bar. Rule 2.3.3 reads:-

“The Ombudsman shall not consider a complaint if three years or more has elapsed from the date on which the complainant became aware or should reasonably have become aware that he or she had cause to complain to the Ombudsman, unless the failure so to complain within the said period was due to circumstances for which, in the opinion of the Ombudsman, the complainant could not be blamed.”

However, in cases where a complaint relates to events that occurred in the distant past, it must be borne in mind that the insurance company no longer has any record of the policy or any record of the transaction which has taken place.

This particular case is somewhat unusual in that the policies were effected in 1952 and 1963 and the event giving rise to the complaint was the alleged non-payment of maturity values which would have been due in the late 1960’s and early 1970’s.

The policies in question were non-profit endowment assurances effected under the aegis of industrial insurance when the complainant was a child. The complainant alleges that neither he nor his mother can recall any benefits ever being paid. Surprisingly the insurance company still had records of the contracts, including a copy of policy documents.


As one copy policy bore an office stamp stating that the maturity value had been paid on 20 April 1967 the insurance company rejected the request for further payment. So far as the second policy is concerned, there was nothing to suggest that a maturity benefit had been paid and as the sum assured was relatively small the insurer, somewhat generously, agreed to pay the maturity benefit together with interest.

November 2006

CR180 Delay- group funeral scheme


Delay- group funeral scheme- late submission- exceptional circumstances that can be taken into consideration for late submission- equity considerations


The complainant submitted a claim for his deceased wife a year and a half after the event. The insurer declined the claim on the basis that the policy document makes provision for a claim to be submitted within a period of six months.


In dealing with this matter we considered the reasons given by the complainant for late submission, i.e:

• he is illiterate;
• he was unaware of the benefit due to him;
• he is a farm worker living in a remote rural area;
• he only became aware of the benefit due to him through the help of trade union officials who read the policy on his behalf.

We also considered that the policy premiums were paid, on his behalf, by the trade union to which the complainant belonged. This indicated that the complainant did not have first hand dealings with this policy.

We pointed out to the insurer that we regarded these reasons for late submission as compelling and justifiable to the extent that they presented special circumstances.

In the light thereof we recommended that it would be equitable that the complainant’s special circumstances be accommodated and that the insurer should assess the claim on its merits.


Following our recommendation the insurer agreed to review its decision and accepted the claim.

[cross reference: to equity]

November 2006

CR97 Compensation for late payment of death benefits caused by unjustified delay by an insurer.


Compensation for late payment of death benefits caused by unjustified delay by an insurer.


Eleven years after the death of the deceased/policyholder, we received a complaint from a family member that the insurer insist that the claimants provide it with copies of the inquest record and blood samples before they would consider payment of accident benefits. A rather surprising response to our enquiry to the insurer reads – “In order to ensure a timeous and satisfactoriy resolution of this matter, the following action is being taken so far:
We confirm that we are still awaiting a full inquest and blood test”. The insurer confirmed that they have requested these from the family members of the deceased. The insurer, however, was provided with a copy of a report on a medical/legal post mortem examination which confirmed that the deceased who was a security guard, died as a result of multiple bullet wounds.

The attention of the insurer was drawn to 5.3 under the heading “Fishing Expeditions” in the Ombudsman’s 2002 annual report. In that report it was emphasised that the onus to obtain information which confirms the right to deny liability or decline a claim, generally speaking, rests on an insurer. Repeated requests to family members without any attempt to obtain such information from official sources directly is not considered to be sufficient. The available information furthermore does not support a reasonable suspicion for reliance on a contractual exclusion of “contraventionof the criminal law”.

In response the insurer advanced as further justification for the delay that one of the nominated beneficiaries was a minor and that the insurer requested that “a Trust Fund be opened for the minor beneficiary”.

It was pointed out to the insurer that there is no basis for the requirement of the setting up of a Trust Fund. The claim form in respect of the minor was completed by that minor’s mother and natural guardian.


Our evaluation of this matter was that the grounds advanced for non-payment of the claim were totally unsubstantiated and unjustified. Under the circumstances, the insurer was requested and agreed to pay compensation calculated at 15% per annum from 90 days after the date on which the claim was submitted to the date of payment.

October 2005

CR66 Delay in transfer of funds from one insurer to another – who is liable for the loss?


Delay in transfer of funds from one insurer to another – who is liable for the loss?


When the complainant retired in 1999 he bought a living annuity from Insurer A. In September 2002 he decided to convert the living annuity to a fixed interest annuity and contacted his brokerage. A meeting took place in November 2002, the brokerage applied for quotations from various service providers and the complainant decided on a fixed interest annuity with Insurer B. According to the brokerage it was stated to the complainant that the specified quote was only valid for one week and the transaction process was explained to the complainant. He was informed that the process could take 4 – 6 weeks and that the assets will be in the market until such time that the transfer is finalised.


The transfer had to be done in terms of Directive 135. On 28 November 2002 the brokerage forwarded all the required documentation to effect the transfer to Insurer A. On 12 December 2002 a master agreement in terms of Directive 135 was sent to Insurer B. On 18 December 2002 Insurer B confirmed that no existing master agreement of this nature existed between itself and Insurer A and such an agreement should first be entered into with Insurer A. According to Insurer B all authorized signatories from themselves were on leave and it could only be signed and finalised during January 2003. On 2 February 2003 Insurer B faxed the signed master agreement to Insurer A, but the Board resolution and proof of banking details were outstanding.

On 7 February 2003 Insurer A requested the outstanding documentation and confirmed that it will not proceed with the transfer until receipt of the outstanding documentation. On 13 and 17 February 2003 respectively Insurer B provided the outstanding documentation and on 4 March 2003 Insurer A paid the funds to Insurer B. At this stage the complainant’s investment with Insurer A has decreased due to adverse market conditions, and the annuity rates available to him in March 2003 were lower than what they would have been had his investment been transferred earlier.


In this case Insurer B took the initiative and visited our office, stating that the earlier explanation that there was no-one available to sign the master agreement on Insurer B’s behalf, is not acceptable. Our office and Insurer B came to an agreement that a month was a reasonable amount of time for the transfer to have been effected, and that Insurer B should enhance the value of the investment to what it would have been at the end of December 2002, as well as to offer the complainant the annuity rates that would have been available to him in January 2003. The complainant was satisfied with this settlement.


CR48 Onus of proof – life insured murdered – payment of proceeds to beneficiary delayed


Onus of proof – life insured murdered – payment of proceeds to beneficiary delayed


The insured insured his own life for a substantial sum in favour of his wife. He was found murdered in his motor vehicle on a country road a considerable distance from his home. The insurer delayed payment of the proceeds of the policy to the beneficiary on the grounds that the police were not prepared to issue a certificate that the beneficiary was not a suspect. The police refused to issue such a certificate because they had not completed their investigations. It became apparent that the police were not making any real progress with their investigations. More or less a year after her husband’s death, the beneficiary approached this office for help. On enquiry it transpired that there were no real grounds to link the beneficiary to the crime. This was confirmed by a lie detector test taken by the beneficiary.


Although the principle that nobody may benefit from his or her own crime holds good, we came to the conclusion that the insurer, on whom the onus rested, did not present a tittle of evidence implicating the nominated beneficiary. We were consequently of the view that it was incumbent on the insurer to pay the proceeds a reasonable time after the occurrence of the event insured against. A reasonable time under the circumstances was regarded as two months from the death. Consequently the insurer was requested to pay the capital amount together with interest calculated from this date. The insurer complied.


CR17 Delay – exclusions – late submission of claim


• Delay – exclusions – late submission of claim – is the insurer entitled to rely on the exclusion clause?

Mr A suffered a stroke on 29.07.2002. His doctor suggested that he wait “close to a year and only than (sic) it would be possible for him to say if damage is permanent or temporary.” He approached his brokers during mid July 2003, but they were no longer representing the insurer. He alleged that nobody informed him that the brokerage had changed.

On 15.07.2003 (before the expiry of 365 days) he wrote directly to the insurer, requesting claim forms. He received no response and approached another broker for assistance. Only after the intervention of this broker, did Mr A find out who the new brokers were that dealt with these policies.

His second letter was sent via registered mail and reached the insurer. However, the claim was declined due to late submission. Their decision was based on the following wording in their contract:

“notice must be given to Us in writing within 365 days of any occurrence which may give rise to a claim under this Policy.

All certificates, information and evidence required by Us shall be furnished in the form prescribed and without expense to Us and must be submitted to Us within 365 days following notification. After 365 days the onus shall rest with the claimant to prove that We were not prejudiced in any way as a result of the late notification.”

We requested details regarding the prejudice that the insurer may have suffered as a result of the late submission of the claim. The insurer informed us that the renewal date of the scheme was on 01.04.2003 and that “renewal terms are negotiated according to the loss ratio.” We concluded that the 365 day period in which Mr A had to notify the insurer of the claim only ended on 28.07.2003, so the renewal terms would not have been a factor, as he could still have submitted his claim after the renewal date of 01.04.2003. We also took into consideration that Mr A wrote to the insurer on 15.07.2003 regarding this matter, but it appears as if the letter got lost in the mail.

We suggested to the insurer that it should meet the claim, which it did.