The latest determination by the FAIS Ombud provides clear evidence that the moving of an insurance book is not merely a routine admin matter which can be left in the hands of others.
On 24 November 2006, the complainant purchased short term insurance cover for his vehicle through the intermediation of the first respondent. On 2 March 2008 the complainant was involved in a car accident.
He notified the respondent’s office and followed this up on Monday, 4 March 2008 with a further call and a fax, which was acknowledged by the respondent’s PA.
On 5 March 2008, the complainant was informed that his insurance premiums had been outstanding since November 2007. In response to his assertion that he always had sufficient funds in his account, he was requested to fax his bank statements to the respondent. He was then requested to pay R3 000 into the respondent’s account to pay the arrear premiums.
On 16 March 2008 the complainant met with the respondent where the latter informed the client that he did in fact not have any insurance, but that he, the respondent, would be acting as the insurer and he would handle the claim himself.
It subsequently came to light that the respondent had moved his entire book to a new insurer at the end of 2007. For some unknown reason, the complainant’s policy was not transferred together with the rest. The complainant was also not notified of the change of insurer, nor was his permission obtained as is legally required. He only discovered this when making his own enquiries.
On 7 July 2008, the FAIS Ombud’s office sent the respondent a request to respond, together with all supporting documentation, and followed this up with a reminder on 13 August 2008.
The respondent simply noted in his response that he had investigated the matter and satisfied himself that he needed to sort it out with his client. He further informed the Ombud that he had contacted his insurers with regard to a claim against his Professional Indemnity cover.
On 29 January 2009, this Office wrote to the first respondent seeking an update on the PI claim. He responded, advising that he had been travelling abroad and promised to revert without delay, which he failed to do. To date not further communication has been received from the respondent.
The Ombud noted: “Such is the contempt with which respondent has treated this Office.”
Concerning the transfer of the respondent’s book, the Ombud notes:
“When the respondents cancelled the policy, they had no mandate from the complainant nor did they attempt to seek such mandate. It can thus be concluded that the cancellation could not have been in the complainant’s interests. This is clear from the fact that respondent was not even remotely aware that complainant’s insurance arrangement was not successfully transferred to the new insurer. It was only when complainant lodged his claim that they became aware.”
“Had respondent diligently followed the move with a reconciliation exercise, he would have noted that complainant’s insurance was not with the “new insurer” and acted accordingly. Not only was respondent’s conduct void of care and diligence, it undermined the General Code.”
“It would be a waste of time to canvass the various sections of the Code that were violated by respondent’s conduct. Respondent, clearly, was neither concerned with the Code nor his client’s rights when he cancelled complainant’s insurance.”
“A further assault on the rights of the client is that of denying them the right to choose whether they want to deal with a particular insurer. Clients like the complainant learn after the fact they are now insured with a new insurer without them having had any say in the matter and are expected to continue with the payment of premiums and adhere to the terms and conditions of the new insurer violation as though they were party to the negotiation of such terms. Such conduct cannot be allowed. Brokers continue to feel emboldened to act in this fashion because, very often, there is no resistance from clients. They are simply not aware that their rights have been violated.”
“As for the respondent’s attempt to put the blame on complainant for not paying premiums, this is disingenuous. Complainant’s assertions that he has always made sufficient provision for the payment of his premiums have not been disturbed and, had it not been for respondent’s unlawful act of cancelling his policy, complainant in all likelihood, would have been insured at the time of the accident.”
The respondent was ordered to pay a sum of R52 700 to the complainant. The amount is made up of an amount of R49 700 for damage to the vehicle and the R3 000 paid to the respondent for arrear premiums. No mention is made of the complainant’s other expenses, including R22 000 in respect of storage of his damaged vehicle and the rental of a substitute car, which was provided for in the original policy.
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