A VIDEO went viral on social media showing Thandaza Mtshali and her aunt, Ntombenhle Mhlongo, taking the corpse of Sifiso Justice Mtshali, in a body bag, to Old Mutual’s offices in KwaDukuza (Stanger), demanding that their claim be paid out.     African News Agency (ANA)
A VIDEO went viral on social media showing Thandaza Mtshali and her aunt, Ntombenhle Mhlongo, taking the corpse of Sifiso Justice Mtshali, in a body bag, to Old Mutual’s offices in KwaDukuza (Stanger), demanding that their claim be paid out. African News Agency (ANA)

Insurers’ front line needs fixing

By Martin Hesse Time of article published Dec 5, 2019

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The Old Mutual dead body saga has, predictably, dominated the news in recent weeks. It’s the type of news story that the public, with its irrational predilection for the morbid and macabre, loves reading (and “sharing”). It is also the type of story that is eagerly pounced upon by conspiracy theorists.

A year ago, the media was awash with a similar story – the Momentum/Ganas case. Both stories have fuelled a widely-held perception that the large insurance companies callously disregard the suffering of individuals. But that is where the similarity ends.

In the Momentum case, a life policy claim was rejected on the basis of the non-disclosure of a medical condition. The ensuing outcry revealed a serious misunderstanding on the part of the public about the nature of life insurance. The insured individual was shot dead in a hijacking, but the claim was rejected because, according to Momentum, he had not disclosed his high blood sugar levels. How, the public wondered, could the one be related to the other?

In the Old Mutual case, a claim was not rejected; it was delayed. Instead of the expected 48 hours, a funeral policy payout took four days. The distraught family members, needing to bury their relative, took the drastic step of dragging his corpse in a body bag to Old Mutual’s office in KwaDukuza (Stanger), KwaZulu-Natal. The insurer paid up immediately and subsequently apologised, saying it “needs to make our additional claims assessment processes easier and faster to ensure we do not let any of our customers down in their time of greatest need”.

The reaction on Twitter was hysterical, with many people declaring they would cancel their policies (read “Be cautious before switching”, below, on why such a knee-jerk reaction is a bad idea). The family concerned has taken it further, saying they will sue Old Mutual for hardship and suffering, according to one news report.


Delayed payouts on funeral policies are rare, Old Mutual says. The company told Personal Finance it pays 99% of valid funeral policy claims within eight working hours.

In response to a question on why the claim was delayed, Old Mutual said: “Each claim must follow our normal claims verification and assessment process. The claim was delayed only because it needed to be assessed further. For various reasons, a small percentage of claims need to undergo additional checks. Sometimes this is required when a policy has been on our books for less than a year, which was the case with this claim; or to exclude possible fraud (which is rife in South Africa, unfortunately).”

Insurance fraud presents a huge headache for the industry. Medical schemes and life insurance companies are seeing more and more cases of false claims and over-claiming, where, sometimes, medical practitioners are involved in the fraud. Forged death certificates are not uncommon. There is also a rise in fraud on short-term insurance policies: a recent news report quotes Vera Nagtegaal of Hippo.co.za as suggesting that up to 32% of car insurance claims could be fraudulent.

This points to a bias in news reporting, because, while an insurer’s ill treatment of a policyholder may make headlines, it’s unlikely that a policyholder defrauding an insurance company will do so.


In my column on the Momentum case last year, I suggested that the weak link in the industry’s efforts to win the public’s trust was its representatives on the ground. It is this “front line” with the public that needs attention, in my view.

When a policy is sold to you, there should be no rushing through the documentation in an attempt to make a quick sale. The adviser or broker, whether face-to-face or over the phone, should painstakingly explain how the policy works, going through the terms and conditions with you step by step, ensuring you understand every sentence.

The same applies when you need to claim – often this is a time when a client is grieving the loss of a loved one and is in desperate need of a compassionate, helping hand.

This “hand-holding” approach is especially necessary in communities that are largely uneducated in financial products and where financial literacy levels are low.


The Financial Sector Conduct Authority (FSCA) says it has noted a call on social media for the cancellation of Old Mutual policies. It urges customers not to cancel their policies, as these are some of the risks involved with such an action:

* If you cancel a life policy, you may find it difficult, if not impossible, to find new cover if you have developed a medical condition in the interim.

* A life policy taken out when you are younger is usually a lot cheaper than one taken out when you are older. A new policy may not only have higher premiums; it may also be difficult to get the same cover and limits you had before.

* Early termination of an investment policy could attract penalty charges.

* There may be a waiting period attached to a new funeral policy.

The FSCA says that if you do decide to replace your policy, it is essential to first obtain a detailed comparison of the features and costs of the old and new policies, preferably with the help of a qualified financial adviser.

For more information, contact the FSCA on 0800 110 443 or visit www.fsca.co.za


Old Mutual has issued educational material for policyholders highlighting the claims process and ways to escalate or query a claim.

Submitting a funeral claim

1. Register the death. Obtain a death notification form (BI1663 or DHA1663) from the medical doctor and funeral parlour. This form is used to register the death at your nearest Department of Home Affairs office, to obtain a death certificate.

2. Gather documents, including:

* The death certificate;

* Proof of identity for beneficiaries/claimants; and

* Proof of banking details for beneficiaries/claimants for payment of the claim.

3. Complete the claim forms and submit with the documents.

Old Mutual says it will pay out or communicate with customers within 48 hours of receiving the required documents. “For various reasons, a small percentage of claims need to undergo additional checks. We will let these customers know if we require any additional forms or documents. There may be additional requirements for unnatural causes of death.”

Escalating a query

Old Mutual provides an internal channel for queries and complaints. If your complaint or dispute is not resolved, you may contact the Office of Internal Arbitration at Old Mutual at PO Box 80, Mutualpark 7451, or email [email protected].

You can also send your complaint to the Ombudsman for Long-term Insurance at Private Bag X45, Claremont 7735, or phone 021 657 5000 or 086 010 3236, or email [email protected].


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