Policyholder waiting for funeral policy payout after three years

Three years and seven months … that’s how long a funeral policy benefit remained unpaid when the FAIS Ombud issued a determination against the product provider.

The Ombud issued the determination in November last year after the FSP failed to settle the claim despite agreeing to do so in June 2020.

The complainant, “LAR”, took out the policy in September 2019 with Uncle Mikes 24 Funeral Services Pty (Ltd), which trades as Nattex Funeral Services.

The benefit was R40 000, and the premium was R250 a month. The insured individuals under the policy included one of LAR’s cousins, “TE”.

TE died on 13 April 2020, and a claim was submitted two days later. Nattex rejected the claim, saying TE had died within the six-month waiting period that applied to death from natural causes.

LAR said the policy was seven months’ old when her cousin died. She lodged a complaint with the FAIS Ombud in June 2020.

In its response to the Ombud’s office, Nattex said the claim would be paid. It undertook to pay R10 000 a month from the end of August 2020 until the R40 000 had been paid out, the determination states.

But three years later, LAR had still not received any payments.

The Ombud said the following facts were undisputed:

• LAR paid all the required monthly premiums.
• The policy conditions confirmed there was a six-month waiting period in the case of death from natural causes.
• TE’s death certificate stated that he died of natural causes on 13 April 2020.
• The policy was incepted on 25 September 2019.
• The contractual six-month waiting period started on 25 September 2019 and ended on 25 March 2020, which was before the date of TE’s death.

No response from the FSP

In October last year, the FAIS Ombud sent Nattex a recommendation that it settle the claim. Nattex did not respond.

“Repeated attempts to contact the respondent telephonically and by email have been unsuccessful,” the determination says.

The Ombud found that Nattex was in contravention of section 2 of the General Code of Conduct, which states: “A provider must at all times render financial services honestly, fairly, with due skill, care and diligence, and in the interests of clients and the integrity of the financial services industry.”

The Ombud upheld the complaint and ordered Nattex to pay LAR R40 000, plus interest of 11.75% a year from 26 June 2020 until the date of the final payment.

The period in which Nattex could apply to the Financial Services Tribunal for a reconsideration of the determination has expired.

The determination will be filed with the relevant court as an order, which means the determination will have the effect of a civil court order, and the complainant can enforce it using the applicable court procedures.

Why the three-year lapse?

I asked the Ombud, Advocate John Simpson, why three years had lapsed between Nattex’s agreeing to start paying the claim (August 2020) and his Office sending the FSP the recommendation (October 2023).

Simpson was appointed as the Ombud on 1 November 2022.

“We identified a number of old cases on our system that had, unfortunately, not been finally resolved for many years. We are in the process of finalising these old cases. In August 2023, we identified 105 active cases which were older than two years. We have now reduced that to five cases,” Simpson said.

“Our ultimate aim is to finalise cases as soon as possible, and in time, we want to finalise most cases within three months. It should be rare for any case to be older than six months,” he said.