CR97

Compensation for late payment of death benefits caused by unjustified delay by an insurer.

Background

Eleven years after the death of the deceased/policyholder, we received a complaint from a family member that the insurer insist that the claimants provide it with copies of the inquest record and blood samples before they would consider payment of accident benefits. A rather surprising response to our enquiry to the insurer reads – “In order to ensure a timeous and satisfactoriy resolution of this matter, the following action is being taken so far:
We confirm that we are still awaiting a full inquest and blood test”. The insurer confirmed that they have requested these from the family members of the deceased. The insurer, however, was provided with a copy of a report on a medical/legal post mortem examination which confirmed that the deceased who was a security guard, died as a result of multiple bullet wounds.

The attention of the insurer was drawn to 5.3 under the heading “Fishing Expeditions” in the Ombudsman’s 2002 annual report. In that report it was emphasised that the onus to obtain information which confirms the right to deny liability or decline a claim, generally speaking, rests on an insurer. Repeated requests to family members without any attempt to obtain such information from official sources directly is not considered to be sufficient. The available information furthermore does not support a reasonable suspicion for reliance on a contractual exclusion of “contraventionof the criminal law”.

In response the insurer advanced as further justification for the delay that one of the nominated beneficiaries was a minor and that the insurer requested that “a Trust Fund be opened for the minor beneficiary”.

It was pointed out to the insurer that there is no basis for the requirement of the setting up of a Trust Fund. The claim form in respect of the minor was completed by that minor’s mother and natural guardian.

Assessment

Our evaluation of this matter was that the grounds advanced for non-payment of the claim were totally unsubstantiated and unjustified. Under the circumstances, the insurer was requested and agreed to pay compensation calculated at 15% per annum from 90 days after the date on which the claim was submitted to the date of payment.

EdeB
October 2005