The Office of the FAIS Ombud erred in dismissing a policyholder’s complaint because it did not adequately examine the relevant facts and evidence regarding an insurance broker’s conduct, the Financial Services Tribunal (FST) has found.
The applicant, Christo Nel, lodged a complaint with the Ombud’s Office in October last year after the insurer rejected his claim for his stolen vehicle. The reason for the repudiation was that the vehicle was not fitted with a secondary tracking device and back-up unit, as required by the policy.
Nel contends he was not informed of this requirement, whereas his broker, Barton Insurance Brokers (Pty) Ltd, says he was.
A key aspect of the dispute is that Barton submitted Nel was so informed using his wife’s email address, which was provided when the comprehensive insurance cover was initiated. Yet, the Tribunal noted there was a pattern of communication using Nel’s email address after the policy had been incepted.
Changes to the policy
Nel insured his Toyota Fortuner 2.8 for R735 100 with Guardrisk in July 2020. Nel and his wife were the co-holders of the comprehensive insurance policy, which preceded the purchase of the vehicle.
As required by the policy, the vehicle was fitted with an alarm, an immobiliser, and a tracking device. One of the terms of the policy was that the policyholder would be notified if it should become necessary to instal a secondary tracking device and back-up unit.
Also in July 2020, Nel asked Barton to make him the sole policyholder. According to the Tribunal’s decision, the communication in this respect was conducted using Nel’s email address.
In February 2021, Nel asked Barton to include certain items or assets in the policy, but he did not want his wife to be told of the additional cover. Nel used his email in communicating with Barton about the additional cover in February and March.
Secondary tracker requirement
The Fortuner was stolen in July 2023, and Barton submitted a claim on Nel’s behalf.
Nel received an email from the insurer requiring proof that a tracking device and back-up unit had been installed before deciding whether to approve the claim. According to Nel, this was the first time he became aware of this requirement.
Guardrisk subsequently rejected the claim because the Fortuner was classified as a high-risk vehicle and therefore had to be fitted with a secondary tracker and back-up unit. According to the insurer, it notified Barton on 24 February 2023 that the devices had to be installed by 1 April 2023.
Nel alleged Barton was negligent and breached its obligations by not informing him of this requirement. After Barton failed to adhere to his letter of demand, he complained to the Ombud.
In April this year, the Ombud’s Office dismissed Nel’s complaint, saying it lacked reasonable prospects of success.
Lack of supporting evidence
According to the Tribunal, the issue for the Ombud to determine was whether the broker was negligent in using the email address of Nel’s wife when it sent the notice to fit the secondary tracker and back-up unit.
Barton submitted it used the email address of Nel’s wife because this was the email address for the policy on CIB’s system. Barton, as a broker for CIB/Guardrisk, has full access to the system.
It further submitted that when Nel added the Fortuner to the policy, the policyholder’s name was changed to his name only, and “he arranged to pay the premiums and sent all communications to Barton regarding the policy” (FST’s emphasis).
The Tribunal said the statement “sent all communications to Barton regarding the policy” was not detailed or supported. It said Barton had not provided evidence to contradict Nel’s version that correspondence was conducted using his email address.
It said the Ombud’s Office seems to have ignored “the proven and undisputed facts” regarding the communication between Nel and Barton since July 2020.
Instruction not to use the wife’s email address
The Office stated that although Nel’s wife had been removed as the policyholder, Barton continued to use her email address because Nel had not specifically instructed the broker to change it.
The Tribunal took issue with this conclusion for two reasons.
First, on the facts provided by Nel, it was not necessary for him to have provided a specific instruction to Barton to use his email address when the notice to fit the secondary tracking device and the back-up unit was given. Barton, through its employee, had communicated with Nel in 2021 using his and not his wife’s email address.
Second, the FST said it was “unreasonable and negligent” on the part of the broker to use Nel’s wife’s email address when, in his email of February 2021, Nel made it clear that he did not want his wife to be sent any notifications of whatever nature.
The Tribunal said this instruction by Nel, the sole policyholder, was ignored. Instead, in February 2023, Barton elected to send the back-up tracker notification to his wife, who was no longer a policyholder.
Nel denied that the notice to fit the back-up tracker was ever brought to his attention. He also indicated that his wife told him she never received such a notice.
The Tribunal said it did not appear from the record that the Ombud’s Office investigated these denials before deciding to reject the complaint.
The FST concluded that the Ombud erred in rejecting Nel’s complaint on the basis that it had no prospects of success. It set aside the decision and ordered the FAIS Ombud to reconsider the complaint.
