An insurance broker who replaced household contents and vehicle insurance for a Johannesburg man and failed to notice a mistake in the policy has been ordered to make good the almost R125 000 the man lost on a claim.
Although the insurer, Discovery Insure, admitted it had erred when it insured the man’s household contents for R100 000 instead of R1 million, the Ombud for Financial Services Providers, Noluntu Bam, found the broker, Gen-Assist Insurance Brokers, liable for failing to act with care when obtaining the cover.
In April 2013, Marc Hughes of Craighall Park asked Gen-Assist Insurance to replace his existing Zurich Insurance policy with a Discovery Insure policy. The broker asked Discovery for a quote matching the cover of the Zurich policy, but when the quote came, Gen-Assist failed to check it.
It was only after Hughes was the victim of an armed robbery in August 2013, and goods to the value of R141 521 were stolen, that Discovery’s error was detected.
Discovery Insure applied what is known as averaging, only admitting a claim of R16 560 in proportion to actual value insured.
Gen-Assist claimed Discovery was liable, but the ombud found that the broker’s failure to ensure the information in the quote was correct was a breach of the code of conduct under the Financial Advisory and Intermediary Services Act.
Bam says there was a “drastic reduction” in premium, and this should have raised alarm bells.
The ombud also found that the broker took no steps to ensure Hughes’s cover was still appropriate for his needs, no records were kept of the service provided, and Gen-Assist did not fully disclose all the implications and costs of the replacement product.
She ordered the broker to pay Hughes R124 960, the balance of the claim.