CR197 Mistake by the insurer – enuring to the benefit of the complainant.


Mistake by the insurer – enuring to the benefit of the complainant.


The complainant wrote to us to complaint about the policy maturity value because he believed the amount of R279941,59 which he was advised was the fund value on 22 November 2005 was understated.

He also complained that he had received no information during the term of the policy regarding its performance.

The policy matured on 1 December 2001. He extended the maturity date. At 1 December 2001 the maturity value was R309000. The complainant was upset that the value of the policy had decreased after the initial maturity date and that his request for an actuarial verification of the value of the policy had not been acceded to. He also pointed out that the policy had been altered from an international portfolio to a local portfolio without his prior consent.

The insurer conceded that it had wrongly changed the portfolio of the policy but stated that it had made a correction on its books to reflect returns based on the international portfolio and that the R279941 was indeed the correct amount.

The mediocre investment value, so the insurer explained, was entirely due to poor returns in the off-shore portfolios and to the strengthening of the rand subsequent to the investment in the international portfolio.

The insurer also pointed out that the policy performance was in fact worse off in the international portfolio than it was in the local incorrect portfolio in which it had in fact been invested. The difference in value at date of change had been some R100000.


We asked the insurer whether it would be prepared, as a gesture of goodwill, to give the policyholder the benefit of its error by allocating the value in which the policy had in fact been invested (the local portfolio) as the value of the policy, even though it was not in fact the correct (the international) portfolio. We conceded that there was no legal obligation on it to do so but we mentioned that certain asset managers, in similar circumstances, would oblige policyholders by granting them the benefit of such errors.


After further consideration the insurer eventually agreed to give the complainant this benefit, the result of the insurer’s own error, of some R70000.

November 2006