CR101

Jurisdiction – Exclusion clause – insurer alleges that it paid accident benefit in error – summons issued by insurer to prevent prescription – rules as they their read.

Background

The insured “the deceased” died in a motor accident whereupon the insurer paid out an amount of R216 982 to the beneficiary partly as an accidental death benefit. Some time thereafter the insurer claimed repayment of the amount paid as the accident benefit since it had discovered that the deceased’s blood alcohol content at the time of the accident had been 0.2g/100ml. This was in excess of the legally permissible limit. The insurer alleged that the assured had died as a result of circumstances which could be related to the abuse of alcohol which was specifically excluded in terms of the policy contract. The insurer further alleged that it had rejected payment of the accidental death benefit but that, as a result of an error in its computer system, the benefit was erroneously paid to the beneficiary. On this basis the insurer sought repayment of the amount of the accidental death benefit.

The beneficiary, through her broker, did not accept the situation as sketched by the insurer and approached our office for assistance. The complainant referred to several discrepancies concerning the description of the deceased. It appeared that affidavits originally lodged and reflecting the correct physical details of the deceased which were subsequently substituted with different affidavits. The insurer insisted that the errors in the original affidavits had been genuine errors. In view of the fact that the insurer’s claim for payment was about to prescribe, the insurer issued summons against the beneficiary, claiming repayment of the accidental death benefit on the basis that she had been unjustifiably enriched.

We suggested to the insurer that, in the event of the beneficiary undertaking not to rely on a defense of prescription, the insurer should consider withdrawing the action so as to permit our office to consider the issues in dispute. We also raised the possibility that the insurer had instituted legal action against the complainant for the purpose of removing the dispute from the jurisdiction of our office.

As rule 2.3 of our rules then read the office would not consider a complaint which is the subject matter of legal proceedings.

Assessment

Since the insurer in the instant matter ran the risk of its claim against the complainant prescribing before the Ombudsman had finalised his investigation and made a ruling, the question arose whether the Ombusman retained jurisdiction to hear a dispute where a subscriber, acting in a justifiable manner to prevent its claim from prescribing, had instituted legal proceedings.

We also raised the question whether the insurer in the instant case had not been motivated to remove the matter from our jurisdiction by instituting the legal proceedings. Prior to the institution of legal proceedings, we had questioned whether the insurer was entitled to rely on the exclusionary clause in regard to the alcohol or drug abuse and if so entitled, what that affect was in regard to the payment of the accidental death benefit seen in the light of the known circumstances and the delay in making the payment. We further questioned on what grounds the repayment was sought and whether the facts justified a repayment on a balance of probabilities.

Result

Since the observations of the doctor who performed the autopsy on the deceased and the affidavit by the policeman, responsible for the weighing of the body and the measuring thereof, were in dispute, we needed to consider whether our office should continue dealing with the matter. The issues could not be resolved on affidavit and it would be necessary for witnesses to be examined and cross-examined. Having also received an assurance from the insurer that it had instituted proceedings not because it wished to remove the matter from the jurisdiction of our office, but because it required to protect its right in law in view of the impending prescription of the claim, we concluded that the matter did not fall within our jurisdiction.

Largely as a result of this case rule 2.2.2 was formulated to make it plain that our jurisdiction is only excluded where it is the complainant, and not the insurer, who instituted or contemplates instituting legal proceedings

EdeB
October 2005