With the release of the Annual Report of the Long Term Ombud earlier this year, Deputy Ombudsman Jennifer Preiss mentioned that her office noted a steady increase in complaints about funeral policies. In 2016, 35% of their complaints related to funeral cover; in 2017, it increased to 37%; and last year, it comprised 41%.
She also commented that the most common complaints regarding funeral benefits relate to where someone has died during the 6, 9 or 12-month waiting period. If the person dies during that waiting period there will be no claim paid.
However, in one of the latest determinations the insurer was requested to pay the full claim as the interpretation of the six-month waiting period was ambiguous, contradictory, and not easily understood. It was the office’s opinion that the policy must be interpreted according to the the contra proferentem principle.
The contra proferentem rule states that “if there is any doubt about the meaning or scope of an exclusion clause, the ambiguity should be resolved against the party seeking to rely on the exclusion clause. It is the other party who is given the benefit of the doubt”.
Background
The complainant joined a funeral group scheme covering his parents and uncle. He signed a stop order for the premiums to be deducted from his salary. The inception date was 1 June 2018. The complainant received a participation certificate when the policy was issued. His uncle died on 9 December 2018 and the complainant submitted a claim. The insurer declined to pay out the full claim as the person died during the waiting period.
The Ombud’s assessment based on terms and conditions
The Ombud meeting’s view was that the policy terms and conditions were ambiguous and conflicting. As a result they were of view that fairness demands that the claim should be considered.
The policy terms and conditions confirmed that the waiting period information applicable reflected on the participation certificate and the certificate clearly stated that the waiting period expired on 30/11/2018. Therefore, the policy terms and conditions did not confirm that the waiting period was “6 months” and it also did not reflect on the policy terms and conditions issued to the client:
The insurer contested the provisional outcome as the applicable waiting period is mentioned. They also explained how the incorrect dates were generated and drawn the Ombud’s attention to the disclaimer in the policy contract.
However, the Ombudsman upheld the provisional determination for the following reasons:
- The insurer admitted that a system error caused the “Cover Start Date” on the Participation Certificate to be incorrectly calculated.
- The interpretation of the six-month waiting period was ambiguous, contradictory, and not easily understood.
Therefore, based on the contra proferentem principle, the insurer was instructed to pay the original claim of R20 000, which it duly did.
Click here to download the Ombud case.
