The enforcement committee of the Financial Services Board (FSB) has fined assurance company Smart Life R150 000 for not notifying policyholders of their rights when claims were rejected. The case was referred to the enforcement committee by the Registrar of Long-term Insurance.
According to the FSB, between April 2013 and June last year, Smart Life contravened the Policyholder Protection Rules by, when rejecting claims, failing to inform its policyholders of their right to make representations to the insurer within 90 days of the rejection notice, and their right to lodge a complaint with the appropriate ombudsman.
As aggravating factors the registrar considered, among other things, that Smart Life had failed to demonstrate sound insurance principles and practice in the interests of the policyholders and that its failure to comply with the rules had the potential of causing prejudice to the policyholders whose claims were rejected. In mitigation, the registrar took into account, among other factors, that Smart Life accepted responsibility for the contravention, co-operated with the registrar’s investigation and the subsequent enforcement action, and undertook to implement measures to prevent similar contraventions from recurring.
Consequently, the registrar agreed to a penalty of R150 000, which was imposed by the enforcement committee on Smart Life on June 14.