Illustration: Colin Daniel

Life assurance companies cannot disregard cultural nuances when dealing with claims, the Ombudsman for Long-term Insurance, Judge Ron McLaren, has said in a recent ruling. 

In a matter that called into question the definition of relatives, he said some African languages do not have a term for second cousin, and a second cousin is simply referred to as a cousin. 

Sanlam declined a funeral policy claim because the insured did not meet the definition of “cousin” in terms of the policy. 

The policy was taken out by Mrs A on December 1, 2011. She submitted the claim (for R17 250) for a relative who died on April 17, 2015. The deceased was insured as Mrs A’s cousin. “Cousin” is defined in the policy as “the child of the policyholder’s aunt or uncle”.

However, at claim stage, it was established that the deceased was, in fact, Mr A’s second cousin – the grandmothers of Mrs A and the deceased were sisters. 

Sanlam declined the claim and refunded Mrs A the premiums she had contributed. 

In her complaint, Mrs A said that, at application stage, the broker had been aware that the deceased was her second cousin and had said she could be covered as a cousin. 

The matter was discussed at a meeting of adjudicators in December 2015 under Judge McLaren. The office made a provisional determination that, although contractually Sanlam may decline the claim, policyholders would not necessarily check the definition of a common-usage term such as “cousin”. It was agreed that, in terms of fairness, the claim should be reconsidered and paid. 

Sanlam disputed the provisional determination. It argued that the complainant had accepted the terms and conditions of the policy, which clearly stated what the life assurer considered a cousin to be. Although Sanlam agreed that in certain cultures a second cousin may be a cousin, this was why the policy specifically included the definition of “cousin”.

An attempt to resolve the matter with Sanlam was made in August this year. Sanlam said research in 2015 and 2016 had identified the need to expand the definitions of wider family members. However, cover did not extend to second cousins, because the relationship was considered too remote. It said that broker training had been enhanced and a family tree had been devised to assist with the classification of family relationships. Its stance on the claim remained unchanged. 

The matter was again discussed, on August 25, 2017, and the provisional determination was unanimously upheld. In addition to other factors, the meeting said an inference could be drawn that, because Sanlam’s research had been conducted only in 2015 and 2016, and since Mrs A’s policy was sold in 2011, it was likely that the advice given to her had been inadequate. 

The rules of the ombudsman’s office provide that, where a claim cannot be upheld in law, it may decide a case on equity or fairness principles. 

“A common misconception is that treating every policyholder exactly the same means that the insurer is acting fairly. Equity has to take into account the individual circumstances of a particular policyholder or complainant,” Judge McLaren said. 

In a final determination, he ordered Sanlam to pay the claim of R17 250, which it did, less the premiums already refunded.