CR129 Funeral insurance – non-conclusion of contract – estoppel – compensation

Funeral insurance – non-conclusion of contract – estoppel – compensation


The complainant was an existing policyholder with the insurer. In April 2004 he completed an application to add his mother to his existing policy for cover of R10 000. This would have increased his premiums from R58.50 to R332.50.

He handed the application form with a signed stop order to a sales manager of the insurer. For some unexplained reason the application form was not processed by the insurer. In June 2004, having noticed that there were no deductions from his salary in respect of the increased premiums, he enquired from the sales manager and was reassured, so he said, that it took time for such deductions to be processed. Since the sales manager was no longer in the employ of the insurer the insurer could not confirm or deny that such enquiries were made.

It was common cause that the application form and stop order were received by the insurer but were not processed and that no notification was sent to the complainant’s employer for an increase to the premium.

In May 2005 the complainant’s mother died. A claim was made but was declined by the insurer.


It was clear that the complainant could not assert a claim on the policy itself since his application was never accepted by the insurer. An endorsement to the contract was accordingly not made. It is true that the complainant was misled by the sales manager, when he enquired, but it was not, in our opinion, reasonable for him to have allowed matters to rest from July 2004 until May 2005. Long before his mother died, he should have realized, particularly after he had made enquiries, that matters had not been rectified. That being the position the insurer could not be held to have been estopped from raising the non-conclusion of the amendment of the contract as a defense to the claim on the policy.


The complaint was accordingly not upheld, but in terms of Rule 3.2.5 we requested the insurer to pay an amount of R1 500 to the complainant for material inconvenience or distress or financial loss suffered by the complainant as a result of error, omission or maladministration on the part of the insurer.

The insurer agreed to pay the suggested compensation.
April 2006