The Ombudsman for Long-term Insurance has ordered Liberty Life to pay interest on a claim that was made in 2012 yet only paid out in 2015. The Ombudsman, Ian Middup, instructed Liberty Life to pay interest from 60 days after the date of claim. In total R347, 459.34 was paid to the claimant for the period between 8 April 2012 and 17 August 2015.
Initially the insurer was only going to pay out interest for the period 13 July 2015 to the date the claim was paid out, 17 August 2015. However, after coming under pressure from the complainant, this was amended to 23 January 2013.
The reason for the delay in paying the claim was due to the circumstances around the death of the insured. “The case involved a policy which commenced with effect from 1 September 2010 with cover of R1 000 000. The insured passed away on 27 January 2012 at the age of 46.
“The Liberty Life policy in question, like most others, contained a suicide clause that allows the company to deny benefits if the insured commits suicide during the first two years of the policy,” explained the Ombudsman.
The claim
The claimant submitted a death claim with Liberty Life on 6 February 2012 following the death of his partner. However, there were questions as to the cause of death, which delayed the pay-out. The Ombudsman revealed that the circumstances surrounding the death were as follows:
- The deceased was alone at the time of her death and there were no signs of forced entry into the house.
- The deceased was found by her fiancé in the bathroom.
- The deceased was not breathing.
- The deceased was being treated for depression at the time.
- The police docket contained photographs of numerous medications that appeared to have been found near the deceased.
From these findings it was suspected that the deceased had committed suicide, which would complicate the claims process.
“Toxicology tests were to be done for the purpose of the post mortem report and Liberty Life had been advised that it could take up to seven years to obtain the results. The claim was deferred as Liberty Life required the results to determine the exact cause of death,” stated the Ombudsman.
Nicholas van der Nest, divisional director of Risk Product Innovation at Liberty, told Justmoney: “In general it is up to customers to source and provide an insurer with the relevant details required in order to assess a claim. Given the significant delays in obtaining the evidence for this particular claim, Liberty agreed to arrange for a toxicology report from a private pathologist at our cost. We have proven our commitment to paying all valid claims as quickly as possible over the years, as we know that paying claims provides the security of knowing that a financial plan in place delivers on its promise. We believe in transparency around our claims payment practices and were the first insurer to publish our claims statistics in 2006 and annually since.”
The delay
When asked if all cases take so long to resolve, van der Nest said: “The time it takes to reach a claims decision differs depending on the details of the claim, the resources available (both publicly and privately), the level and quality of information provided as part of the claims submission, amongst others. Very few claims require a full investigation (for example where the cause of death is inconclusive). By far the majority of claims are assessed and paid within a few days of receiving complete information.
“As explained above though, the time required to complete an assessment is often beyond our control where external and public sector resources are involved. We remain committed to constantly review our practices to ensure the speedy resolution of claims where it is within our control.”
However, due to the delays in the finalisation of the claim, the claimant’s attorney submitted a complaint to the Ombudsman. It was later established that the medications photographed by the police had in fact not been found near the deceased, but had rather been placed on the kitchen counter by the police for photographing.
Following discussions between all parties involved, Liberty Life agreed to rush the toxicology test results, which were completed in June 2015. After receiving the report which ruled the cause of death as inconclusive on 13 July 2015, Liberty Life paid out the claim on 17 August 2015.
A dispute ensued about the interest that was due to the claimant due to the length of time taken to pay the claim. Following a number of discussions between the parties involved, it was concluded that interest from 8 April 2012 (two months after the insured’s death) to 17 August 2015 (the day the claim was paid out) would be paid to the claimant.
The Ombudsman stated: “Fairness demands that as the complainant/estate was deprived of the use of the proceeds of the policy for the time that it was in Liberty Life’s possession, interest was payable from the time that the claim payment was due, despite the absence of fault on the part of Liberty Life.”
Liberty explains its process
Liberty highlighted that when it comes to cases such as these and where a toxicology test needs to be conducted there is no defined period for receiving these results.
“As part of the claims resolution process we generally use the national infrastructure which includes the Government Pathology department, police service and the likes. Any backlogs affecting the turnaround times in these organisations will therefore also impact on our ability to assess and finalise a claim made,” explained van der Nest.
He added: “As the largest writer of risk policies for the past 12 years, we have consistently delivered on our duty to customers to ensure that only valid claims are paid. Making payment in respect of invalid claims implies that the longer term sustainability of our products and their associated premium rates may come under threat. To provide our customers with greater security we therefore ensure that all claims are assessed against the relevant policy wording, which sets out the intention of the contract.
“Claims due to suicide are excluded in the first two years of an insurance policy generally. Where we expect suicide in respect of any claim, a forensic investigation is carried out to obtain further detail on the claim and determine its validity. The extent of the investigation depends on the specific details of the case in question and might include a police investigation, toxicology report (as was the case here) or other requirements. In general claims cannot be resolved until the cause of death is established by the authorities,” stated van der Nest.