In light of the recent issues with two large life insurers declining claims, I decided to provide an independent comment on lies and non-disclosure on application for a policy. I would like to make it clear that I am not defending any insurer in these comments. I am defending the principles of an orderly society, ethical business and responsible media.
On Monday morning I happened to listen to a well known radio personality, on his very high horse, ask the country why Momentum would appoint someone with no emotional intelligence as CEO. This he said without knowing the CEO of Momentum from a bar of soap, or having any understanding of the laws and principles that govern insurance in South Africa. To make blanket statements about highly technical and legal issues, for which one has absolutely no qualification, is simply put, stupid. People study for many years to qualify as lawyers, actuaries and judges, for the very reason of dealing with these complicated matters.
Below some points for consideration:
- A STOP sign is placed at an intersection because, on average, it is safer to stop at that intersection than to yield. An expert in road traffic management, who studied and gained experience made that call. You always have to stop at a STOP sign, even when it is safe to yield, because we cannot rely on the judgement of each driver, due to the fact that judgement varies too much. This principle can be found all over society and is the very fabric of an orderly society. Even with these laws, we still have Courts, High Courts, Courts of Appeal and a Constitutional Court, who, through a rigorous system, sets precedents as to how anomalies should be dealt with. It is not for everyone to decide how anomalies should be dealt with, as that would lead to chaos and total un certainty.
- South African life insurers paid R63.7 billion to individuals who had experienced death, disability or a severe illness in their family circle in the 12 months ended June 2018.
- The Ombudsman for Long-Term Insurance is Judge Ron McLaren, who served and presided over difficult and varied legal cases for decades. A man of true integrity. In 2017 he received 8 300 complaints against the millions of claims that were paid.
- A total of 4 381 fraudulent claims were uncovered in 2015 (Unfortunately I don’t have the latest statistics)
It is the fiduciary duty of insurers to protect their clients from the actions of applicants who do not disclose or lie about elements of the application that might negatively affect other policyholders
- South Africa is a country that suffers from fraud, corruption and general lawlessness. It is clear that we need strict rules and enforcement
- The starting point of any contract is honesty between the contracting parties. Not half-truth, full truth and disclosure. You cannot start a long term contractual relationship on a dishonest footing.
- Life insurers ask for full disclosure and honesty at application stage, which includes medical records. Applicants are also informed of the risk of non payment of claims resulting from lying or non-disclosure. If you answer yes to a question and you know it should be no, you are lying.
- It is not in the interest of life insurers to not pay claims, as can be seen by the public relations challenges caused when claims are not paid. It is in the interest of life insurers and their clients to pay valid claims and decline invalid claims, thereby protecting the investments made by every client who pays a premium. Numerous valid claims are paid after only one premium has been paid.
As the media, we have a responsibility to call in the experts to deal with matters that are above our level of expertise, because our comments influence the decisions of large numbers of people.
The public rely on us to not voice unsubstantiated comments on matters we are not qualified on, which in turn relies on our ethics and integrity, not our egos.