CR40 Non-disclosure – insurer’s right to investigate


• Non-disclosure – insurer’s right to investigate

The insured was covered in terms of a policy which provided for various benefits. A claim in respect of temporary total inability to attend to his usual professional duties was admitted and paid. In the course of subsequent enquiries to the insurer, he was informed that a possible “non-disclosure” by him at the time of application was being investigated. He also discovered that his medical practitioner received requests for specific further information.

The insured took the strongest exception to what he termed “continued harassment after the fact”. He contended that the insurer was fully entitled to conduct investigations prior to the decision to admit the claim but that, having once admitted it, the insurer was not entitled to re-open and prolong them further.

The insurer confirmed to us that non-disclosure was initially investigated but that it was decided, based on a statement by the insured at the time to honour his claim. The insurer contended that statements made by the insured during subsequent interviews created not only a suspicion but indeed the probability that the previous statement was not true. Hence the insurer requested further information from the insured’s medical practitioner.
We accepted it as trite law that the admission of a claim would not as such limit an insurer’s right to investigate an earlier failure to comply with the duty of disclosure. But it was also accepted that specific issues of non-disclosure may be condoned and disposed of during the process of the consideration of a claim. In those circumstances an insurer’s right to re-investigate or rely on earlier non-disclosure may be compromised. On the facts of this particular case it could not, however, be concluded that the aspects of non-disclosure that were later investigated were identical to the ones referred to our office earlier.

We informed the parties that the insurer was entitled to pursue its investigations and to take such steps as may be appropriate, whereupon the insured terminated the contract and the insurer, without prejudice to its rights, decided not to pursue the matter any further.