CR387 Prescription



Insurer mistakenly paying a cancer benefit in 2009 at a higher level than it should have been paid – insurer realising mistake when a claim for progression of cancer lodged in 2020 – insurer seeking to set off the new claim against the amount overpaid in 2009 – debt prescribed.


1. The complainant lodged a claim in 2009 under the insurer’s dread disease benefit following a lobectomy arising from Stage 1 lung cancer.  The claims assessor determined that this qualified for a Cancer Benefit, Severity D 25% benefit – Stage 1 Lung Cancer, and a Respiratory Disease Benefit, Severity B 75% benefit – Lobectomy.  As these two severe illnesses were related, only one benefit was paid, based on the higher severity level, in accordance with the policy.  The amount paid on the Severity B level for the Respiratory Disease Benefit was R463 476.82, 75% of the cover amount.

2. In April 2020 a further claim was lodged.  The lung cancer condition had progressed, and now qualified for a Cancer Benefit, Severity C benefit.  Severity C pays 50% but because this was an upgrade from a Severity D benefit the payment would be at 25% – the amount of R187 036.76.

3. At this point however (almost 11 years later), the insurer discovered that it had been wrong in assessing the claim as qualifying for a Respiratory Disease Benefit Severity B back in 2009.  The complainant had had an upper right lobectomy.  The claims assessor had apparently misread the criteria, one of which was “any disease or disorder requiring removal of >one lobe of lung”.  She had only had one lobe removed.  She should only have been paid R154 492.28 in 2009, so was overpaid by R308 984.54. 

4. The insurer decided to recover this amount by setting off the balance overpaid against the amount of R187 036.76 now due.  Because the overpayment exceeded the amount now due, it informed the complainant that no amount would be paid for her 2020 claim, and the insurer would, “as a gesture of good faith”, not recover the balance of the overpaid amount, R121 947.78, after the set-off was applied.

5. The complainant argued that the insurer’s claim for recovery of the overpayment had prescribed.  The insurer maintained that its claim had not prescribed, due to the insurer not having any deemed knowledge of the claim until the second claim was lodged in 2020, and the insurer having no ground to suspect an error by the assessor.


6. The matter was discussed at an adjudicators meeting.

7. In terms of section 10 of the Prescription Act, 68 of 1969 (“the Act”), a debt shall be extinguished by prescription after the lapse of the applicable period.  In terms of section 11 this is three years, in respect of a debt based on unjustified enrichment.  In terms of section 12, prescription shall commence to run as soon as the debt is due.  As stated in Contract – Principles (fifth edition) by Van Huyssteen, Lubbe and Reinecke: “A debt is due when the creditor has the right to institute action immediately for the recovery of the performance and the debtor is unable to raise a defence against the claim”. (p 536 and 537)

8. Section 12(3) of the Act provides that

“A debt shall not be deemed to be due until the creditor has knowledge of the identity of the debtor and the facts from which the debt arises: Provided that a creditor shall be deemed to have such knowledge if he could have acquired it by exercising reasonable care”.

9. The insurer argued in this case that it only became aware of the debt when it considered the second claim in 2020.  According to the insurer, “once a claim has been approved and payment finalised, the matter is closed and no further consideration will be given to a claim”.  There would thus, the insurer argued, have been no way to determine the error until such time as a new claim was submitted: “Our audit processes at the time did not provide for re-assessment of authorised claims”. The insurer further stated: “We confirm that despite the fact that we knew who the debtor was and that the facts pertaining to the assessment was at our disposal when payment was made…we simply did not know that the claim was incorrectly categorised”; which the insurer submitted was an “excusable error”.

10. The complainant argued that she did not have to show that the insurer had knowledge that the debt was due, if she was correct that in light of the proviso to Section 12(3) the insurer should have known it by exercising reasonable care.  She submitted that it could and should have.

11. The meeting considered that in 2009 all the relevant facts were known to the insurer.  The claim was properly submitted, the insurer incorrectly assessed the claim and erroneously overpaid R308 984.54.  The insurer could have sued for the recovery of the overpayment immediately after it had been made, on the basis of unjustified enrichment (the condictio indebiti).  The complainant would have had no defence. Everything had happened which entitled the insurer to institute action and pursue its claim. 

12. In the view of the meeting, with reasonable care the insurer could have found out about its error.  Insurers can and do audit claims, and can be expected to check the decisions of assessors, within a reasonable period.  The insurer must therefore be deemed to have had all the knowledge it needed for the running of prescription to commence. 

13. On the insurer’s version the claim could remain enforceable for ever.  This would mean that in all cases where an insurer pays a claim, there is a risk that the insurer might at some future date review its earlier decision and claim repayment, without prescription coming into play.  This could not be in line with the purpose of section 12(3) or of rules of prescription generally.

14. As was stated in Minister of Finance and Others v Gore NO 2007 (1) SA 111 (SCA), “The statutory prescription periods are meant to protect defendants from undue delay by litigants who are laggard in enforcing their rights”.

15. In the view of the meeting prescription commenced to run on the date the debt became due, and the debt became prescribed three years after that, or at best for the insurer a reasonable period after the three years to allow an opportunity to review earlier assessments, which period must be much less than the ten years which have elapsed since the 2009 claim was paid. The insurer’s claim based on unjustified enrichment had therefore prescribed.

16. The meeting also considered the application of Treating Customers Fairly (TCF).  For more than ten years the complainant lived as if the payment was due to her and arranged her affairs accordingly.  In 2020 she had a medically valid further claim, but was told by the insurer that she had no claim, would be paid nothing, and in fact owed R121 947, which the insurer was prepared to waive.  In the view of the meeting this was not fair treatment.


17. The meeting concluded that the insurer must pay the 2020 claim for the Cancer Benefit to the complainant, together with interest from 18 June 2020.  A provisional ruling to this effect was made.

18. The insurer complied with the provisional ruling.

CR329 Late submission of claims


Late submission of claims

Claim delayed by police taking possession of documents for criminal investigation.

A group scheme funeral policy, of which a funeral parlour was the beneficiary, stipulated that a claim would not be payable if not submitted within 6 months of death. The main member, her partner and her minor child were covered under the policy, and all three died in a fire in their home in June 2010. Their burial was interrupted by the police who, suspecting that the main member’s partner had been involved in criminal activities, therefore took possession of the bodies and all relevant documents including the death certificates. The police investigation took longer than 6 months thereafter. Because it would be late for the purposes of the policy the funeral parlour decided not to submit a claim, but instead to recoup the burial costs from the family of the main member.

The family of the main member submitted a complaint to the office, and after intervention we were advised by the insurer that the claim would be admitted in respect of all three insured persons. Payment followed in August 2011, fourteen months after the date of deaths.

Late submissions of claims are generally not accepted by insurers under group schemes and funeral policies, especially where the claim is submitted a substantial period of out of time. It can sometimes happen, however, that timeous submission is beyond the control of the claimant. In this matter the insurer, which frankly did not claim to have been prejudiced by the delay, agreed that the circumstances justified the relaxation of the 6 month restriction.

January 2012

CR285 Late submission of claims Death and disability claims in terms of mortgage protection policies

Late submission of claims

Death and disability claims in terms of mortgage protection policies – individual policyholders, members of their employer’s housing scheme, having been granted mortgage bond by their employer, ceding their policies to their employer – can the insurer be held liable where the employer fails to notify it of the claims within the periods set out in the policies?

Summary of facts

Employees of a certain company to whom it granted housing loans in terms of the employer’s housing scheme, each had to take out a policy with the insurer which was thereupon ceded to the employer as security for the repayment of the mortgage debt in the event of the employees’ death or disability. Clause 14 of each policy provided that by ceding the policy to the employer the life insured’s rights and obligations arising from the policy would be made over to the employer, and that in the event of a valid claim the benefit would be paid to the employer. In the case of a death the insurer would pay the balance of the mortgage bond plus an amount not exceeding R10 000 for the costs incurred in connection with the discharge and cancellation of it, while in the case of a permanent disability the insurer would pay only the balance of the mortgage bond.

Each policy provided that a death claim was required to be submitted to the insurer within 6 months from the date of death, and a disability claim within 365 days from the date of the bodily injury.

The practice was that in the event of the death or disability of the life insured, his dependants would inform the employer’s housing department which in turn would assist her/him with the completion of the relevant claim form, and the employer would then submit the claim documents to the insurer. Having also taken over the insured’s obligations in each policy, the employer in any event had the obligation to submit the claims concerned.

In six cases the office received complaints from the dependants of the life insured or the life insured himself. One involved a disability claim and the others each a death claim. In all of the death claims the employer had been notified of the deaths concerned within 5 months from the date of death, yet the employer failed to submit the claims to the insurer either within the stipulated time or at all. With regard to the disability claim, the claim documents were submitted to the employer 8 months after the date of injury, but the claim was only submitted by the employer to the insurer 14 months after the expiry of the 365-days’ time limit. Relying on the time limitations referred to in the policies, the insurer repudiated liability for the claims.

The complainants subsequently approached the office for assistance.


The office’s view was that the insurer had been justified in placing reliance on the relevant limitation clauses, so that its decision to repudiate the claims on contractual grounds could not be faulted. We requested the insurer, however, to indicate what prejudice if any it would suffer if the office were to exercise its equity jurisdiction in the complainants’ favour and call upon it to assess each claim on the merits despite the late notification.

The insurer responded as follows:

• The rights and obligations arising from each of the group scheme policies vest in the employer and the insurer as parties to the contract. (Correctly stated, however, the employer had not been a party to the policies, but it had nevertheless taken over all of the policyholders’ rights and obligations.)

• The employees are only the lives insured, and not parties to the contract. (Correctly stated, however, the employees had in fact been parties to their policies, but they had made over their rights and obligations to the employer.)

• The employer had breached its duty arising from the provisions of the contract to submit the claims within the prescribed time periods.

• There had been several instances of such breach in the past, which led to the insurer arranging a meeting with the employer during 2006, at which the employer admitted liability. In an effort to assist the dependants, an agreement was reached at the meeting whereby the insurer, although not in fact liable, would settle all the outstanding out-of-time cases that had already been notified to it at that point, which amounted to R1.39m; all cases that had not been notified to it at that point and did not appear on the list of late-reported claims would stand rejected; and the employer would write off the debt with regard to those.

• The employer had not paid any premiums towards the group policy since the beginning of November 2008 and the employer had in writing terminated the group scheme policy with the insurer.

• As there was no longer a business relationship between the insurer and the employer pertaining to the group scheme, it would be prejudicial to the insurer and contrary to sound business practice to require the insurer to honour the various outstanding claims that had not been part of the 2006 settlement agreement with the employer

• The complainants had a right of recourse against the employer.

It must be emphasised that none of the six matters being considered by the office had been brought to the insurer’s attention as at the date of the 2006 meeting between the employer and the insurer.


Although the office did not necessarily agree with all of the insurer’s submissions, it ruled that it could not exercise its equity jurisdiction in the complainants’ favour, and in doing so took account of the following:

(a) that it was the employer’s repeated breach of the policy conditions that had landed the complainants in their predicament.

(b) that the insurer had made reasonable efforts in the past to assist the dependants of the lives insured.

As the complainants’ right of recourse lay against the employer, the matter fell outside the ambit of the office’s jurisdiction and the office could not assist the complainants in that regard.

October 2009

CR284 Late submission of claims Equity – unique circumstances.

Late submission of claims

Equity – unique circumstances.


The life assured, who was murdered, held a policy which provided that:
The claim must be submitted within 12 months from the date of death.

The complainant, his wife, was the named beneficiary, and she lodged a death claim some 21 months after the murder. The insurer declined the claim on the basis of late submission.

The complainant contended that the reason for the delay was beyond her control. She and another had been formally accused of having murdered the life assured. She had been continuously detained from shortly after the life assured’s death and after a lengthy trial she was acquitted and released, while her co-accused was convicted of the murder.

She lodged the claim with the insurer promptly after the trial was concluded.


In the light of the unique circumstances surrounding the delay in lodging the claim, as outlined above, we invited the insurer to reconsider its decision.


In response thereto the insurer’s Claims Committee decided to waive the defence of late submission and assessed the claim on its merits. It met the claim in full.

October 2009

CR226 Late submission of claim /Interpretation of contract


Late submission of claim /Interpretation of contract


The complainant approached our office when two separate claims under two separate policies were declined by the insurer due to late submission.

The policies commenced in October 2002 and August 2003 respectively and made provision for Permanent Total Disablement benefits due to accident. In November 2004 the complainant injured himself when he fell from a ladder. At the time his back felt a bit stiff and it deteriorated as the weeks passed.

In December 2004, he consulted his doctor who prescribed traction. He was also referred for an MRI scan in January 2005. Medical reports revealed degenerative discs in the lower back region.

The policies contained an accident plan providing that a benefit would be paid if the insured person “sustains injury which, solely and independently of any physical defect or infirmity existing prior to the accident, results within 12 months of the date of the accident in an insured event as stated in the Table of Benefits”.

It was only on 19 January 2006 that the complainant completed claim forms in which he alleged that there was an accident, and that he had sustained an injury which resulted in the occurrence of the insured event “Permanent Total Disablement”.

When the claims were declined due to late submission the matter was referred to us for consideration.


The late submission clause, which was common to both policies provided:

“The claim form and all supporting documentation as may be requested will be supplied at Your own expense, and must be received by Us within 180 days of the Accident.”

In his initial letter the complainant explained that he informed the insurer that he delayed submitting his claim because his doctors told him that he had a 50-50 chance of recovery and he wanted to be sure of his disability before claiming payment for it.

Having reviewed the information at our disposal, we were of the view that there were two aspects to the complainant’s claim. Firstly, were the claims submitted late and secondly, and if not, did the complainant qualify in terms of the Permanent Total Disablement benefits?

In our view the claim was not submitted late. The contracts defined Permanent Total Disablement to mean:

“total and absolute disablement which entirely prevents an insured person from engaging in or giving attention to gainful occupation of any and every kind. The diagnosis and determination of the permanent total disablement must be made by a physician and must be continuous and permanent for at least 24 consecutive months from the onset of the disablement. Documented evidence of the incident that caused the permanent total disablement is required.

The degree of permanent total disablement will be determined immediately after it is established or as soon as it can reasonably be assumed that there will be no further improvement or worsening of the insured person’s condition in consequence of the accident, but not later than 24 months from the date of loss.”

We were of the opinion that the definition in this particular insured event could not be determined to have occurred until 24 months had passed, as the disablement must be continuous and permanent for at least 24 months from the onset before the requirements of the definition of the insured event “permanent total disablement” have been met.

This was at odds with the requirement of the clause that “the claim form and all supporting documentation as may be requested … must be received by us within 180 days of the accident”.

In other words, there was an inconsistency or ambiguity in the policy wording, which results in an absurdity: to comply with the 180 day clause a policyholder would have to submit a claim for an insured event which by definition cannot yet have occurred.

The contra proferentem rule, whereby a contractual provision is construed against the contracting party (the insurer) by which or on behalf of which it was formulated, would be the appropriate principle to apply to resolve the ambiguity. In this case this would mean interpreting the policy to mean that a claim for the insured event “permanent total disablement” would have to be lodged within 180 days of the alleged occurrence of the event as defined. On this interpretation of the policy the claim would not have been lodged late.

However, even if one assumed that the claims were lodged timeously, medical reports submitted by the complainant did not suggest that the requirements for liability by the insurer to pay the benefits were met. As his condition was degenerative it clearly was a physical defect or infirmity which existed prior to his accident. The fall was therefore not the sole and independent cause of the insured event. Even if the accident might have made his condition worse, the degenerative condition which preceded the fall also contributed to the alleged condition of permanent total disablement.


We shared our view with both parties that there was no documented evidence of the incident that caused the permanent total disablement; that there was no evidence that the complainant’s disabling condition was so “total and absolute” that he was entirely prevented “from engaging in or giving attention to gainful occupation of any and every kind”. Furthermore, medical reports suggested that there were still treatment options envisaged and therefore a question mark over the permanence the complainant’s condition. Both parties were given an opportunity to respond, neither did so and we proceeded to close our file.

May 2007

CR225 Late submission


Late submission


The life insured died on 24 October 2005. The policy provided for a notification period of six months. A death claim was lodged on 3 March 2006, well within the submission period. The complainant submitted the required documentation with the claim. The only difficulty was that the copy of the death certificate, although clearly genuine, was so badly copied that it was illegible. The insurer, as it was entitled to do, requested an improved copy which was thereupon submitted in May 2006 (some weeks after the six month period had expired). The insurer then declined the claim on the basis that the legible certificate was submitted beyond the notification period.

The insurer was invited, but declined, to review its decision. Consequently, the matter was discussed in a meeting of adjudicators.


The meeting considered the circumstances surrounding the claim as well as the insurer’s decision to decline it. The meeting was of the view that the insurer’s insistence that the corrected copy should also have been delivered within the prescribed period could not be supported. Not only did the contract contain no provision to that effect but the result was patently unfair.

The meeting expressed its displeasure at the manner in which the insurer handled the matter. It was difficult to escape the conclusion that it was a deliberate attempt to avoid paying out a legitimate claim.


The meeting resolved that the claim should be paid. Furthermore, the meeting mandated the Ombudsman to address a letter to the Chief Executive Officer of the insurer concerned to convey its sentiments. A prompt and positive response was received thereafter, and the claim was paid.

MAY 2007