CR293 Poor service Administration of policies by insurer

Poor service

Administration of policies by insurer –insurer agreeing to change its practice to provide efficient service.


The complainant, as the principal annuitant, held three policies that provided monthly annuities, and had been receiving the annuities since 2000. His wife was the second annuitant on the policies, and in terms thereof would only receive income on the death of the principal annuitant.

The insurer suspended income on one of the policies, claiming that no certificate of existence for his spouse had been submitted by her. The complainant had in fact submitted the certificate, and in acknowledging its error the insurer explained that the certificate had not been “uploaded”.

That of course resolved the complainant’s complaint, but the office remained concerned about the insurer’s practice of suspending payment of annuities to the principal annuitant when prior to his death no certificate is furnished to prove the existence of the second annuitant. The second annuitant would not after all receive any benefit from the policy until after his death.


While the policy conditions did require a second annuitant to furnish a certificate for the verification of his or her existence, the office’s main concern was therefore why the submission of such a certificate was necessary before the death of the main annuitant.

The insurer explained that the amount of an annuity payable to a second annuitant following the death of the principal annuitant is often less than the amount paid to the principal annuitant, and that it was necessary to call for a certificate of existence of the second annuitant in order to ensure that in such a case the second annuitant is not in error paid the same amount as had been paid to the principal annuitant. The insurer contended that, because their records needed to be updated, non-submission of a certificate therefore justified suspending the payments to the principal annuitant.

Our office was of the view, however, that the furnishing of a certificate is not necessary while the principal annuitant is still alive. If its only purpose is to ensure payment of the correct amount to a second annuitant after the principal annuitant’s death, that purpose would still be achieved if the certificate is called for at the stage of notification of the death of the principal annuitant.


We concluded that the suspension of payment of benefits before then would therefore be unfair. We also recommended that, in their procedure to obtain the information they require from a second annuitant, the insurer should in any event involve the principal annuitant as well.

The insurer agreed to change their procedure. The matter was settled and the insurer also agreed to pay compensation to the complainant for the inconvenience caused.


CR205 Poor service – payment to incorrect party.


Poor service – payment to incorrect party.

On occasion a complainant who comes to our office has been treated so badly that it is quite astonishing.


In this particular case the complainant had worked for his employer as a pan lidder for 19 years and had then been retrenched. From the information that we had been sent it was clear that he had belonged to a provident fund at the time but had been advised by an intermediary to purchase an annuity in his own name with the full amount of his provident fund entitlement, as he had reached retirement age.

The complainant approached our office because he had not been receiving a benefit and he was not sure that he had in any event signed any documentation for the benefit.

On making enquiries with the insurer we were surprised that they took a rather casual approach to the matter. They advised us that the R79 000 which had been the complainant’s provident fund benefit had been transferred to a retirement annuity fund within the insurer and there had subsequently been a purchase of an annuity. A policy had also been purchased to guarantee the lump sum that had been invested originally in the event of the complainant’s death.

They advised that it had come to light that the income had been paid to the employer instead of the complainant.

On further enquiry the insurer advised us that the funds from the annuity had in fact been paid into the personal bank account of the Human Resources Manager of the employer at which the complainant had prior to his entrenchment been employed.

The insurer advised that they had contacted this individual who had confirmed that he had now made a pro-rata payment of R20 000 into the complainant’s account and that he was waiting for a statement from the insurer to confirm what was paid into his personal account before he made any further payments to the policyholder to take account of the shortfall.

We were amazed that the insurer took no responsibility for the fact that they had been paying the benefit to the wrong party and that they were not taking any steps to set the matter right themselves other than to pay future monies to the right party.

We insisted that the matter be set right by the insurer immediately and that it was up to them to make arrangements with the Human Resources Manager for any refunds if due.

We advised them that we saw the actions of the Human Resources Manager, over whom we had no jurisdiction, as highly irregular and that we expected the insurer to take further action in this respect.

We further advised that as the complainant had been out of pocket for a period of 41 months that he was entitled to interest on the annuities for this period.

We advised the complainant that he may wish to institute fraud charges against the Human Resources Manger who had not been entitled to the benefit.

During the negotiations the complainant suffered a stroke which complicated matters as he was no longer able to correspond with our office but he had appointed another party as his ‘correspondent’. The correspondent confirmed to us that in fact matters had been put right and the insurer had also paid the interest on the late payment of the annuity.


The documentation in terms of which the complainant had applied for an annuity was forwarded to the complainant’s correspondent as evidence that the complainant had in fact entered into the contract as he had been doubtful about this when he approached us.

November 2006

CR162 Poor service – Insurer providing confidential policy information to a third party


Poor service – Insurer providing confidential policy information to a third party


This was a complaint with a difference; a reminder that a woman scorned can cause a hell of a fury.

Ms A, the woman in question, had recently been divorced. Lots of love was lost between her and her ex-husband. She had an existing policy which he had effected several years before. As she was nearing 60, she decided to effect another policy with the insurer concerned to provide for her retirement. For some or other reason she was particularly anxious, so she informed the broker, that her ex-husband should not have access to the details of her new policy.

But her ex-husband’s own broker (who had in the meantime also become his new girlfriend) was up to the challenge. She telephoned the insurer’s call centre pretending to be Ms A. She quoted her and “her husband’s” existing policy numbers to the consultant who informed her that she could not be provided with details of “her husband’s” policy but nevertheless volunteered the information that she had another policy herself, the number of which she disclosed. The insurer faxed the policy values of both policies to her ex-husband’s “broker”.

Ms A, when she discovered what had happened, was livid. She could not understand how the insurer could have provided information of this nature to a third party without verifying the contact details that were given and did not correspond with the information on the new policy. The insurer took the view that it acted in good faith and suggested that Ms A take the matter up with the broker concerned.

Ms A was particularly upset as her ex-husband was using the information to withhold money from her. She complained to the office who again approached the insurer, who immediately issued a letter of apology to Ms A and indicated that it would take further action against the fraudster. At our suggestion it also offered compensation of R1 000. Ms A rejected the offer stating that “The ‘inconvenience’ I suffered is possibly my share of a R1.5m pension”!

At this point Ms A insisted that the new policy be cancelled and that all premiums paid be refunded to her, her reason being “I feel I need to invest in a company that will respect my confidentiality at all times”.


The office did its best to smooth the ruffled feathers, put the request to insurer and attempted to persuade the insurer to increase the compensatory award to R2 000. We also suggested that the conduct of the broker be referred to the FAIS Ombud. The insurer refused the request for cancellation and a refund of all premiums paid, saying “As we have no voice recordings in place to identify, whether the caller is in fact our policyholder, it is impossible to determine whether the caller is indeed our client. Our Call Centre Staff has no training in Forensic Examinations and can therefore not determine a fraudulent action during a telephone conversation”.

At an adjudicators’ meeting it was decided that, as the office made every effort to assist Ms A, we could take the matter no further. Cancellation of the policy and a refund of premiums from inception was not in our view justified. It was then that Ms A directed and vented her fury on the poor adjudicator who had to inform her of the decision.

And that, as far as the office was concerned, was the end of an unhappy story.


We did not hear from Ms A again.

April 2006