The local insurance industry must become more attuned to the African concept of ubuntu. This was the message in a recent determination by the Ombudsman for Long-term Insurance, Judge Ron McLaren.
According to Wikipedia, ubuntu is often used in a philosophical sense to mean “the belief in a universal bond of sharing that connects all humanity”.
Judge McLaren said ubuntu was enshrined in our law.
He was ruling in a matter in which Sanlam Developing Markets rejected three funeral policy claims from a complainant, Ms M on the grounds that the deceased, Sandile*, had been misrepresented as her son in the policy document when he was neither a biological child nor legally adopted.
According to the determination, Ms M had taken out funeral policies in 2013, 2015 and in 2016 to cover her family, including Sandile.
She had cared for him from 2009 until his death on February 1 last year after he was stabbed in a robbery.
She said she had helped Sandile’s family in a rural settlement when they were experiencing hard times.
In December 2009, Sandile had begun living at her house with her own children and had refused to return to his family.
Ms M said she regarded Sandile as part of her family.
She enrolled him at high school and arranged for his customary circumcision. She treated him like she did her other children because “according to our tradition, an orphan is treated the same way as the kids he lives with”.
“He called me ‘aunt’ and later called me ‘mom’,” Ms M said.
She was supported in her assertion that she regarded Sandile as a son by other members of the community, including Sandile’s sister and brother, his aunt and the village headman.
After weighing the complaint, the ombudsman’s office suggested to Sanlam that it should consider equity or fairness given the circumstances of the relationship.
Sanlam was not prepared to make a concession.
Its view was that there had been a material misrepresentation and it would not have accepted the risk had it known the true nature of the relationship.
The complaint was discussed at a adjudicators’ meeting convened by the ombudsman’s office. The meeting was of the unanimous view that, in this particular case, the insurer should, in fairness, pay the claim.
Sanlam again refused saying: “Our unanimous conclusion is that, taking all considerations into account, this claim should not be paid, no matter how much one’s heart goes out to the bereaved policyholder. The policy contract spells out clearly, in plain language, (who) may be covered - in particular, who can be covered as a child of the policyholder.
“The complainant included the deceased as her child. This was an intentional misrepresentation. She knew the deceased was not her child.
“We acknowledge and endorse your equity jurisdiction and responsibility - and understand what it comprises. In our respectful view, however, it needs to be borne in mind always that equity is not an exact and rigid concept. (It) remains an abstract value.
“In our sincere view, it will not be equitable to pay the claim in this case. An intentional misrepresentation cannot be condoned by an application of equity,” Sanlam said, adding that it would be unfair to expect the pool of policyholders to absorb the expense of the claim.
In his final determination, Judge McLaren said Sanlam was of the view that equity could be applied only within the confines of the actual policy provisions. “If that was so, there would be no need for an equity jurisdiction. It is precisely when the application of the policy provisions leads to an unfair or inequitable result that it is necessary to exercise (this) jurisdiction,” he said.
McLaren disagreed with Sanlam’s assertion that Ms M intentionally misrepresented the facts.
“There was no fraudulent intent on the part of the complainant when she described the relationship as she did. She described the de facto relationship.
“There is no evidence that this was a situation where the complainant had no connection with the deceased and was intent on financial rewards for herself on the deceased’s death.”
He added that Ms M had submitted that the intermediary who sold her the policies had not pointed out that there had to be a blood relationship between her and Sandile.
“Sanlam is correct that fairness is not an exact and rigid concept. It is, however, part of our jurisdiction and has been since 1998; it is prescribed as a requirement for financial ombudsman schemes in terms of the Financial Services Ombud Schemes Act; it is part of the requirements for such schemes in terms of Chapter 14 (to be effective April 1) of the Financial Sector Regulation Act; it is part of the treating customers fairly approach included in the Policyholder Protection Rules and fairness is one of the fundamental principles recommended by the International Network of Financial Services Ombudsman Schemes. It is, therefore, clear that equity, fairness is part of the financial services landscape and has been part of our jurisdiction for more than 20 years.”
Sanlam was ordered to pay the claim (less the premiums it had refunded to Ms M) plus interest.