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.