Poor service by a call centre agent at application stage resulted in the Ombudsman for Long-term Insurance (Olti) ordering an insurer to refund the premiums paid, plus pay compensation. This final determination was one of only five issued by the Olti in 2022.
The policy, which commenced on 1 September 2019, provided cover for death from “non-natural” causes. The policy was bought over the phone.
The policy was administered by a bank and underwritten by Liberty.
The insured passed away on 12 May 2020. Liberty declined the claim because the insured’s death was not due to “non-natural” causes.
The Olti listened to a recording of the sales call and noted the following:
- When asked what cover he preferred, the insured responded “life cover”;
- When the call centre agent mentioned “non-natural”, it was in a rushed manner and often inaudible;
- The insured was not asked whether he understood the terms of cover; and
- The consultant’s response to the numerous medical disclosures made by the insured during the call was “no problem”, which suggested a lack of understanding and appreciation of the importance of those disclosures.
As a result, the Olti questioned whether there had been a meeting of the minds at application stage.
Liberty insisted there had been a meeting of the minds because the contract was concluded in accordance with its sales process, which included all sales calls being recorded, monitored, and scripted in line with industry standards. The call had also passed the insurer’s quality assurance process.
Provisional ruling
The Olti’s adjudicators noted the following:
- The insured was not a sophisticated applicant.
- Although the insured was Afrikaans-speaking, the call was conducted in English throughout.
- The call centre agent did not seem to understand the insured’s medical condition, which had been emphasised and highlighted during the sale.
- From the insured’s medical disclosures, it should have been apparent that he wanted cover for his condition, and he was not applying for accidental cover.
- Even after listening to the call numerous times, it was almost impossible to hear the reference to “non-natural”.
- The use of the term “non-natural” was misleading.
- The insurer had not demonstrated good practice.
The adjudicators concluded there had been no meeting of the minds at application stage, and the premiums should be refunded to the complainant.
Furthermore, the meeting decided that R30 000 should be paid to the complainant by the insurer by way of compensation for poor service.
Final determination
In its response to the provisional ruling, Liberty insurer maintained its view that there had been a meeting of the minds at sales stage and argued that:
- The insurer’s products did not require “sophistication” as a prerequisite;
- The insured was intellectually competent to understand and made affirming gestures in response to what the call centre agent conveyed to him during the sale; and
- The insured was afforded ample opportunity to ask for clarification or explanation if required.
On this basis, the insurer declined to refund the premiums.
However, the bank that administered the policy acknowledged the poor service offered to pay R15 000 as compensation.
The complainant rejected the counteroffer.
The Olti said Liberty had not provided any new information that cast doubt on the correctness of the provisional ruling. On the contrary, the insurer’s stance demonstrated a lack of appreciation of the serious nature of the poor service that had been rendered.
Liberty was instructed to refund all the premiums contributed and to pay R30 000 in compensation.
The insurer accepted the final determination and paid the complainant a total of R31 320.
