South African Insurance Association

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Concerns raised by the Ombudsman for Short-term Insurance (OSTI)

The SAIA Board, at its meeting on 17 August 2017, requested that the SAIA circulate the concerns raised by the OSTI, Ms Deanne Wood, at the SAIA/OSTI Forum on 14 June 2017.

The SAIA encourages members to take note of the following concerns and to address same:

1. Policy wording

Insurers’ policy wording and claims philosophies are not updated and aligned to changes in technology and criminal behaviour. For example, the clause “forcible and violent entry” is strictly interpreted but today, criminals use car jamming devices hence the insured will be unable to demonstrate “forcible and violent entry.” Similarly in commercial policies, it is required that there be “forcible and violent entry” into the main building but often thieves break into a storeroom, for example, and the claim is rejected as there was no “forcible and violent entry” into the main building.

The OSTI acknowledges that evidence is important in car jamming claims but some insurers have rejected these claims despite surveillance footage.

The OSTI stated further that insurers are placing a greater emphasis on criminal conduct rather than the basis of the risk and the protection that should be afforded to the insured. Insureds are therefore paying for cover but not receiving the protection at claims stage due to the strict interpretation of policy wording.

The OSTI recommends that insurers amend policy wording to take into account changes in technology and criminal behaviour.

2. Rejection letters

The OSTI advised that some insurers do not include the OSTI’s details on rejection letters which insurers are legally required to do in terms of the Policyholder Protection Rules.

For more information contact:
Easvarie Naidoo, SAIA Legal Manager