CR364 Payment and non-payment Payment to wrong party

Payment and non-payment

Payment to wrong party – insurer has to pay again – compensation for inconvenience

Persistence does sometimes pay off.

The complainant wrote to us after the insurer concerned repeatedly advised that they had no records any longer of the policy in question.

A policy belonging to the complainant’s father, who had also been the life insured under the policy had been taken out in 1976. The father died in England in 2002 and the insurer was advised of this in 2003. No response was received from the insurer and due to a family dispute probate only took place in 2012. When the complainant wrote to the insurer in 2013, the insurer advised that as the policy had been “off books” for more than 5 years no information was available. On further investigations by our office the insurer produced “screen dumps” reflecting a surrender of the policy. After some further digging the insurer was able to determine that a cheque had been issued and the cheque had been cashed. The complainant denied that there had been the receipt of any surrender amount. What caused further difficulty was the fact that the complainant was overseas, the policy had been issued in British Pound by an overseas branch of the insurer which no longer operated, and the bank that handled the cheque was in the United Kingdom. The insurer however persisted in its statement that the cheque had been sent to the deceased’s United Kingdom address.

The complainant did some digging of his own and found a contact person at the United Kingdom bank. Despite this it took a considerable amount of effort on the part of the complainant and the insurer to trace through another United Kingdom bank that acted as a processing agent for a Canadian Bank, that the money had been paid to an account in Montreal. The bank in Montreal could then confirm that the money had been paid to a client with the same surname but a different first name as the complainant’s father.

The insurer then realised that they had paid the money to the wrong policyholder. This was after almost a year during which time the complainant had sent numerous emails to all possible potential sources of information. The insurer conceded that it had to pay the death benefit (R321 437) to the estate of the deceased policyholder and also offered compensation to the complainant for the inconvenience caused by the error.

After some further negotiation a compensatory amount of R19 300 was paid to the complainant as he had gone to great lengths to obtain information about the incorrect payment and had not been willing to give up.

April 2016