Life is fickle and unpredictable.
This statement is born out again by a recent Ombud determination concerning the switching of life cover from one assurer to another.
The clients, both husband and wife, enjoyed life cover with Old Mutual since 14 April 2010, but was convinced by an adviser, who also sold the original policy, to switch to a Sanlam policy in view of “…purportedly, better cover and benefits, for approximately the same premium.”
The adviser maintained that the Sanlam Topdekking policy was a new generation product, with better non-smoking rates and benefits, than the old generation Old Mutual Greenlight policy.
The notification of acceptance of the Sanlam policy was sent to the complainant on 16 November 2012, with a commencement date of 1 January 2013.
The adviser facilitated the cancellation of the Old Mutual policy “with immediate effect” by means of a notice to Old Mutual dated 6 December 2012. Premiums were normally deducted on the 7th of each month. The deduction scheduled for 7 December did go through, but was subsequently refunded on 8 January 2013.
In his submission, the adviser indicated that the complainant and his spouse requested that the debit order in favour of Old Mutual be cancelled in time, should the Sanlam policy be accepted. They were planning to go to the coast for their annual leave and did not want to pay two premiums.
The client’s spouse then sadly passed away on 21 December 2012. Neither life office was liable for paying the claim as the client was, technically speaking, uninsured.
The client’s spouse submitted a complaint to the Long-term Ombud, who had to agree with the insurers, but referred the matter to the FAIS Ombud for possible negligence on the part of the adviser.
The FAIS Ombud had to consider whether the adviser’s advice or conduct breached the FAIS Act, leading to complainant’s spouse being uninsured under both policies at the time of her death.
Key to the Respondent’s defense, according to the FAIS Ombud, was the assertion that the Complainant’s usual debit order date for all policies was the 1st day of each month, and that the Complainant amended the date to the 7th day of each month without informing him.
Enquiries to Old Mutual indicated that the adviser’s office had, in fact, requested the change of date of payment on 10 May 2010, less than a month after inception of the policy.
The Ombud’s view on the matter is quite harsh:
| What is evident throughout Respondent’s reply is that he never checked the debit order date; he merely assumed, based on past practice. The letter was imprudent, in that it requested an immediate cancellation. No communication was entered into with Old Mutual in order to ensure or request that the cover run until the end of December. In short Respondent did not appear to have taken any precautions to ensure that cover was provided during the month of December. This despite the potential ramifications of just such an event occurring. This is clearly indicative of a lack of due skill, care and diligence.
 Instead, and despite Respondent being the financial adviser of record, having recommended the replacement, and orchestrated the entire process, Respondent now attempts to shift responsibility onto Complainant. Complainant is an administrative manager, with no indication of any particular knowledge of the workings of an insurance policy. To now shift the blame to Complainant is unfair.
The complainant’s Old Mutual policy incepted on 14 April 2010, with life cover in excess of R800 000. The complainant agreed to waive the amount in excess of R800 000, and the respondents were ordered to pay the complainant this amount.