Secondary

offender

Repeat offender Model Insurance – Bad reflection on industry

“En nog is dit het einde niet” – a Dutch saying translated into English as “it is still not the end”. This could be said of the Model Insurance Company, an unlicensed insurer that was prominent in the media a few years ago. In 2012 the FSCA (then FSB) issued a public warning in respect of conducting of business with Mr de Wet. Since 2014, 26 complaints reached the FAIS Ombud’s office, with the latest one being upheld on 28 January 2019.

The complainant is one of a number of policy holders who lodged complaints with the FAIS Ombud following Model Insurance’s failure to honour their claims.

About Model Insurance

The respondent held himself out to be an authorised short-term insurer and collected premiums from members of the public. It emerged from enquiries with the FSCA that the respondent had never been licensed in terms of Section 7(1) of the FAIS Act to render financial services to the public. He had also never been registered to conduct business as a short-term insurer as required by Section 7 of the Short-term Insurance Act.

During February 2012, the FSCA issued a warning, requesting the public not to conduct business with Model Insurance. Despite this warning, the respondent continued to conduct unregistered insurance business. The FSCA reported the respondent to the Commercial Crime Branch of the South African Police Service and secured an interim interdict in the Kwazulu-Natal High Court to stop the respondent from carrying out short-term insurance business.

The latest complaint

  • During April 2013, the complainant entered into a comprehensive short-term insurance agreement with the respondent and cancelled his previous insurance policy.
  • On 29 April 2013, the complainant was involved in a motor vehicle accident with his 2007 Z4 BMW. The damage sustained to the vehicle amounted to R97 776.04. He reported the matter to the South African Police Service and instituted a claim with the respondent.
  • The claim was rejected by the respondent on 29 May 2013, claiming that the terms and conditions of the policy do not provide benefits for claims submitted within the first three months of the policy.
  • The complainant lodged a complaint with the Ombudsman for Short-Term Insurance who in turn referred the complaint to the FAIS Ombud’s office.

The Determination

Having received neither a response nor any supporting documentation from the respondent, the matter was determined on the basis of the complainant’s version. From the history of matters determined by the Ombud’s office on prior occasions, it was clear that the respondent has no defence against the allegations made against him.

From the undisputed facts, the Ombud concluded that:

  1. The respondent failed to comply with sections 8 (1) (a-d); 7 (1) (a); 3 (1) (a) and section 2 of the Code.
  2. Had the respondent adhered to section 8 (1) (d) (ii), the complainant would have been aware of the exclusion of cover during the first three months and therefore in a better position to make an informed decision about cover.
  3. Furthermore, the respondent misrepresented to the public that he was an authorised short-term insurer and financial services provider.
  4. The respondent collected premiums from members of the public but had no financial means to honour claims as they arose.
  5. Although the respondent was not a registered short-term insurer, he entered into a binding short-term insurance agreement with the complainants.

The respondent was ordered to pay to the complainant the amount of R97 776.04.

Although the matter had originally been reported to the Commercial Crime Branch of the South African Police Service, the question is how many of these cases will still come out of the woodwork. Also, what happened to the respondent?

These complaints add fuel to the misconception that the industry is unworthy of trust, as relayed in a recent survey we reported on. Unfortunately, the honest majority is tainted by the work of the minority.

It is doubtful whether this complainant, or any of the other victims of this fraudster will ever see justice in the form of a payment of the amount determined by the office of the Ombud.

With a mandate which requires the “expeditious” handling of complaints, and a less formal approach than other legal institutions, one has to ask why it took so long to finalise this complaint.

Click here to read the latest Model Insurance determination.

Click here to read how Moonstone reported on the case in 2013.

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