Insurer forced to pay unemployed diabetic’s R1.6m claim
Liberty Life, one of the biggest insurance companies in SA, has failed in its bid to reject a six-figure payment to a disabled claimant.
|||Cape Town - One of the biggest insurance companies in the country failed in its bid to reject a six-figure payment to a disabled claimant, and was ordered to cough up.
Long-term Insurance Ombudsman Judge Ron McLaren ordered Liberty Life this week to pay an unemployed diabetic a disability benefit of about R200 000, which includes interest.
The claimant at the centre of the dispute was a machine operator, who was diagnosed with diabetes with “severe peripheral neuropathy” in July 2012. His doctor recommended that he apply for six months' temporary disability through the Unemployment Insurance Fund (UIF), which he did.
In December that year, his doctors noticed that his symptoms showed no signs of improvement and it was then recommended he be considered for disability benefits.
The complainant’s claim was received by Liberty Life in May 2013. In terms of the scheme rules, a claim must be submitted within three months from the date of disability.
Liberty Life pegged July 2012 as the date of disability and argued that the claim was lodged beyond the period prescribed by the policy. The complainant lodged a complaint with the Office of the Ombudsman for Long-term Insurance.
McLaren considered a range of factors, including the explanation for the delay, the degree of lateness, the prospects of success and the prejudice or potential prejudice to the insurer. The claimant explained that he did not expect July 2012 to be his last day of service and, due to the complex nature of his illness, the matter at that stage was not regarded as a disability claim.
A provisional determination decided that on the grounds of equity, the late submission should be condoned, and Liberty Life should be required to assess the claim.
But Liberty Life did not accept this, and took issue with the fact that when the employer submitted the disability claim application on May 6, 2013, it did not provide any reasons for the late submission.
“Liberty Life is saying that a delay of six months or more should in every case be regarded as unreasonable irrespective of the circumstances. However, such a blanket approach in this context is problematic.
“A six-month delay in one set of circumstances may be excessive or unreasonable, but in another set of circumstances it may not be,” McLaren said.
Legal manager for Liberty Corporate Chantal Manson said the claim was paid. “Liberty reviews each (disability) claim on its own merits. Where the policy contract stipulates a notification period, the reasons for late notification will be taken into account in the assessment of the claim.
“When employers are unsure of the merits of a claim, it would be prudent to notify the insurer timeously of such a possible claim. We have had very few cases with adverse determinations in respect of late notification or other reasons for repudiation relative to the number of claims paid,” Manson said.
McLaren said his office received 9 815 written requests for assistance last year, of which about 5 000 became actual cases.
“We receive complaints from people from all walks of life, and from all cultures and language groups. These complaints are about life, funeral, health and disability policies. All policyholders receive our contact details when a policy is first issued, and also when a claim is declined. The most common complaints are about non-payment of claims, and the second most common about poor service,” he said.
An attorney in employment law, Dunstan Farrell, said principles of equity allowed for the claimants' circumstances to be taken into account.
“Insurers tend to apply the rules strictly, but with the establishment of the ombudsman, fairness and equity are considered,” Farrell said.
francesca.villette@inl.co.za
Cape Times