A key individual and underwriting manager who was debarred for allegedly submitting false insurance claims has failed to convince the Financial Services Tribunal (FST) that the decision warrants revisiting.
The South African Short Term Underwriting Agency, better known as SASTUA, summarily dismissed the KI, “RH”, in March this year and debarred him the following month.
According to SASTUA, RH issued several insurance policies in the name of his partner without disclosing the claims history. These policies were issued under First Step Insurance Brokers (Pty) Ltd without their knowledge or consent.
The underwriting agency also alleged that RH submitted multiple fraudulent claims for the same items under different policies. The same items were insured multiple times and claimed for using identical wording and supporting documents.
RH brought his reconsideration application on procedural and substantive grounds.
His primary grounds for reconsideration related to the fairness of his dismissal and the disciplinary process. He contended that the disciplinary inquiry, which led to his dismissal, was unfair. He argued that the reasons for his dismissal were closely tied to the reasons for his debarment.
RH said he had provided written submissions in response to the grounds for debarment, where he explained and clarified his position. He claimed the debarment process was flawed for not adequately addressing or considering his submissions.
The Tribunal dismissed RH’s procedural grounds for reconsideration, finding that the debarment process was lawful, reasonable, and procedurally fair, in compliance with section 14 of the FAIS Act.
RH had been given proper notice of SASTUA’s intention to debar him. He received a written notice of the allegations against him and was informed of his options: to make written submissions, attend a formal debarment hearing, or decline to participate. RH chose to make written submissions, and by his own admission, he was given the time to respond and confirmed his submission on 22 March 2024.
RH claimed he was not notified of the outcome of the debarment process and only found out about his debarment from a prospective employer. The Tribunal noted that although RH may not have been informed of the specific outcome, the fact that the allegations and findings from the disciplinary inquiry were nearly identical to those in the debarment process meant the reasons for his debarment were clear.
Multiple policies for the same item
SASTUA alleged RH would process a claim with an insurer as a result of damage to goods insured in the name of his partner. Once the insurer had paid compensation or repaired the damaged item, the policy would be cancelled and the same goods were insured under a new policy, whereafter a claim, for purported damage to the same goods, would be instituted with the new insurer. RH, when issuing the new policy, not disclose the previous claims history.
In his defence, RH argued that when he issued the first policy (with Renasa), he was working for both First Step and SASTUA concurrently, and First Step was aware of the initial policy. He suggested that his actions were in line with standard practices, and the claims he processed were valid.
The Tribunal said RH’s defence availed only insofar as the first policy, not the subsequent policies.
It said SASTUA accepted, to an extent, RH’s explanation relating to the Renasa policy and First Step’s knowledge thereof. However, SASTUA denied that First Step was aware of the subsequent policies, and it claimed that RH, in issuing those policies and processing the claims, acted dishonestly.
The FST said its assessment of the policies and the claims supported SASTUA’s allegations.
RH’s partner completed a claim form on 5 August 2022 for damage to certain electronic goods that purportedly occurred on 21 July 2022. The explanation for the damage was that the items were in a bag, which his partner intended to load into his car. He put the bag on the ground and went inside to fetch something. He forgot the bag was behind the vehicle and accidentally reversed over it.
RH’s partner accepted R47 047 as settlement for the damaged goods.
The FST said on 10 February 2023, RH’s partner submitted a claim form for damage to certain goods that purportedly occurred on 29 January 2023. The description of the goods was exactly as on 5 August 2022 – likely copied and pasted from the previous claim form. Moreover, the explanation for the damage was a verbatim account of the explanation advanced in the claim form of in August 2022. RH’s accepted R44 782 in settlement for the damaged goods.
The Tribunal said the schedule provided by SASTUA showed that other items with identical serial numbers were claimed for multiple times under different insurance policies.
In addition, SASTUA produced emails and WhatsApp messages as evidence that RH and a colleague colluded to process false claims.
The Tribunal said it was apparent that RH used his position to process false insurance claims.
“The applicant has not proffered any explanation regarding the evidence produced in support of his dishonesty and impropriety and has not demonstrated that he appreciates the seriousness of the allegations against him in the context of his role and duties as a key individual,” the FST said.
