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INSURANCE OMBUDSMAN WARNS ABOUT PREMIUMS DURING LOCKDOWN

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The Ombudsman for Long-term Insurance Judge Ron McLaren has cautioned policyholders about non-payment of premiums.

He was commenting on questions and issues pertaining to insurance surfacing as the impact of the global pandemic and the lockdown unfolds and affects and disrupts people’s health, employment and finances.

Ensure that your premium payments are up to date. If your circumstances have changed, you should check that the debit order or stop order is operating correctly to ensure that your policy stays in force.”

The Ombudsman also warned about COVID -19 scams.

“Beware of scams which can take many forms and could involve insurance policies. Scammers are sophisticated, opportunistic and will try many things. They are also very likely to target the vulnerable.

“To help protect yourself, you should reject offers that come out of the blue; beware of adverts on social media channels; avoid being rushed or pressured into making a decision; and do not give out details relating to bank accounts and insurance, pensions and investments,” Judge McLaren said.

He urged people to read through their policies and to go through the annual statements to make sure they know exactly for what they are covered.

“Check that the beneficiary nominations are still relevant and advise your insurer should you wish to change a beneficiary. If you have become unemployed, inform your insurer as it may affect your benefits.

Judge McLaren said those who were concerned about how COVID-19 would affect life insurance policy or an insurance claim, or whether they are covered for the outbreak or its effect, must contact their insurer as early as possible. That gives the insurer the best chance of assisting and providing the necessary information.

If people were worried about what happens if they cannot pay my premiums on a risk policy during this time, the Ombudsman said the problem must be discussed with the insurer.

He said the three basic approaches by insurers that are providing relief appear to be:

• Premium holidays in some form or another, with or without cover;

• Extended grace periods (the time granted to pay an outstanding premium) during which time cover continues despite no premium being received; and

• Allowing premiums and cover to be reduced for a certain period and reinstatement of cover after that period without any underwriting.

On whether the life or funeral policy pay out as a result of death caused by the coronavirus, Judge McLaren said this will depend on the policy provisions.

“We have not seen policies with exclusions in respect of the coronavirus. However, if the life insured dies of natural causes in an applicable waiting period (most funeral policies have waiting periods) the claim could fail in terms of such a restriction.

“There are exclusions in some policies, e.g. some pre-existing exclusion clauses, on which an insurer might rely to decline a claim.”

Regarding the question of a credit life policy paying in the event of loss of employment as a result of the impact of the virus and the lockdown, the Ombudsman said this will depend on the policy provisions and the particulars of the claim.

“There is no single answer to this question. The loss of employment would have to fit into the terms and conditions of the policy.

“It is more common to have retrenchment cover but there are some policies that provide for loss of income. There are also some insurers that may choose to provide benefits outside of the strict provisions of the policy.

“However, not all credit life policies have retrenchment or loss of income benefits. The claimant should read his/her policy and also contact the insurer to find out what the policy covers.”

The Ombudsman said if one is so ill as a result of the virus that one is unable to work, he or she will have to complete a waiting period (if applicable) in terms of the policy before qualifying for a disability benefit, unless the insurer chooses to waive the waiting period.

“If a claimant is asymptomatic after testing positive for the virus and has to be in quarantine it is unlikely that he/she will qualify in terms of the more common definition of income disability benefits, unless the insurer chooses to relax strict compliance with the policy wording.

“The provision of medical and employment evidence to prove a disability claim may be problematic during this time. A claimant has to prove his/her claim and there may well be delays and other difficulties in obtaining medical evidence and reports during this time when medical personnel will be fully occupied with containing the effect of the virus.

“Obtaining evidence from employers for purposes of proving a claim may also be difficult.

“Insurers will have to be ‘agile’ to adjust to these circumstances keeping in mind the expectations contained in the communication by the Financial Services Conduct Authority (FSCA).

The FSCA recently urged regulated entities (such as insurers) to bear in mind the current circumstances and assist their customers with even more empathy, flexibility and understanding during these difficult times.

“This may include considering relief and support options, especially for vulnerable customers. Entities must ensure that all customers are treated fairly during the entire product cycle, from advertising, to sales, to claims, to renewals and complaints. Profiteering off those that are vulnerable and suffering will not be tolerated," the FSCA said.

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Chanté Meyer