How do you ensure that your insurer plays ball with you?
Insurance giant Momentum found itself in consumers’ crosshairs this week after it declined to pay out the death benefit cover to a family of a man who died of gunshot wounds because he had not disclosed that he had high blood sugar levels. After a storm of protest, Momentum reversed its decision and agreed to make the R2.4-million payout.
Momentum added a policy change to the mix, saying it will make payments of up to a maximum of R3-million in cases where its clients die as the result of violent crime, irrespective of whether they had withheld material medical information or not.
But this does not spell an end to the practice of consumer claims being rejected because of nondisclosure. Which raises the question: How do consumers ensure that their claims are paid out?
Initial reaction from social media users was a call to cancel policies. Momentum said that, since the story broke, 50 policies had been cancelled.
But the overwhelming response has been clients contacting Momen-tum to confirm disclosures made at the application stage.
“If anything, this event has brought the importance of honest disclosure into the public domain,” Johann le Roux, chief executive of Momentum Life, said.
Maritha van der Walt, the convenor of the medical underwriting standing committee of the Association for Savings and Investment South Africa (Asisa), said being open and honest about your medical, occupational and lifestyle history at the onset was critical because it formed the basis of the contract with an insurer.
“Once the client has done that and then the onus is on the company to assess the risk. They have the opportunity to ask for questionnaires, reports from doctors, send a nurse and do whatever they feel is applicable to the risk that they are looking at,” she said.
Consumers should leave it to insurers to determine whether information about their health was relevant or not.
By law, companies had the right not to pay a claim if there was nondisclosure that was material to the issuing of the policy, such as cancer, heart attacks, strokes and diabetes, Van der Walt said.
“If you sprain your ankle and didn’t disclose it, that is not material to the issuing of life cover. [But] it could be important if you fractured your ankle if you are applying for disability cover and you are on your feet [a lot],” she said.
A consumer who suffered from chest pains could undergo an assessment to check whether they were at risk of experiencing a heart attack. Or if they had upcoming medical tests, an insurance company could delay issuing a policy until the client had received the results.
Momentum initially defended its decision to decline Ganas’s death claim by saying, had it been aware of his blood sugar levels, “no cover would have been issued in the first place”.
The standard tests conducted by Momentum when a client applies for life cover vary according to the client’s age, the nature of the benefits and the amount of cover they are applying for.
Typically, these include tests for cholesterol, blood pressure and HIV, and further examinations are done based on what a client discloses.
“The problem is insurance companies penalise clients to such an extent that they do not want to tell the full medical history,” said Herman Klopper, an independent broker and chief executive of Futurum Financial Group.
He said there was a need to look at the underwriting requirements, for example, if a client was to disclose that they were on depression medication five years ago, insurance companies might conclude that they suffer from depression. “The problem is insurance companies must understand that some of these risks are general in today’s life,” he said.
Tebogo Tshwane is an Adamela Trust business reporter at the Mail & Guardian