The Ombudman’s Briefcase of March 2023 reported on two cases where the time-barring provisions in the Osti’s Terms of Reference came into play.
These state that the Ombudsman for Short-term Insurance shall only consider a complaint if he is satisfied that it has not become prescribed in terms of the Prescription Act, or any enforceable time-bar provisions contained in the policy, provided that in relation to any enforceable time-bar provisions in the policy:
- The ombudsman shall have the power to condone non-compliance therewith upon good cause shown; and
- The provisions of any enactment that provides for the extension of any period contained in such time-bar provision shall be given effect to.
Three years in which to submit a complaint
In one of the cases, the insured had a motor vehicle accident in 2014. The insurer rejected the claim based on dishonesty.
The insured approached the Osti in 2022 seeking assistance to remove the adverse record against his name.
The insurer said the insured’s claim had prescribed because more than three years had passed since the claim had been rejected.
In terms of section 11(d) of the Prescription Act, the prescription period for any debt is three years.
Section 12 of the Act stipulates that prescription starts to run as soon as the debt is due.
In this case, prescription started to run when the insurer rejected the claim in June 2014. Accordingly, the insured’s claim prescribed in June 2017.
The Osti said that to address the insured’s complaint about his record, the office would have to investigate the merits and the rejection of the claim in 2014.
The Osti would be able to ask the insurer to amend its records only if the rejection was invalid.
Since the claim had prescribed, the complaint fell outside the Osti’s jurisdiction, and the merits could not be investigated.
Insured was made aware of the time limits
In the second case, the insurer rejected the insured’s claim for the theft of items from her home because there were no visible signs of forced entry into or exit from the insured’s residence. It was a condition for cover that the theft of home contents must be accompanied by visible signs of forced entry into or exit from the insured’s building.
The loss occurred on 29 March 2019, and the claim was rejected on 12 April 2019.
The insured submitted a complaint about the claim to the Osti on 14 March 2022.
The insurer submitted that the complaint was time-barred and fell outside the Osti’s jurisdiction.
The insured’s policy contained the following time limits:
“6.15 We may accept or reject all or part of your claim. You have 90 days after receiving our rejection letter to object to our decision […]
6.16 IMPORTANT: If your objection is unsuccessful, you have six months from the end of the 90-day period to serve a summons on the insurer. If you do not do so in this time, we will have no obligations to you under this policy.”
The Osti looked at rule 17.6 of the Policyholder Protection Rules (PPRs), which deals with the time limitation provisions for the institution of legal action against insurers if a claim is rejected or the quantum of a claim is disputed.
The Osti found that the time-barring clause relied on by the insurer was valid, and the insurer complied with its obligations in terms of the PPRs.
The time-barring provisions were in the policy documents sent to the insured, as well as in the rejection letter.
The insured was aware of the time limits and failed to provide any reasonable explanation for the delay in submitting a complaint to the Osti. Accordingly, the late filing of the complaint could not be condoned.
