After initially deciding that it would not be paying the life insurance claim by the family of Nathan Ganas, Momentum announced on 21 November that it had changed its mind and would be paying out the claim. On 21 November, FAnews published a newsletter on Momentums decision to pay out the Ganas case. This generated a lot of interest among our readers and we received a lot of interesting comments.
FAnewsreceived the following questions and answers from Momentum.
Are you going back on your decision to refute Mr Ganas’s claim?
A full disclosure of medical information remains non-negotiable.
Our decision is sound in terms of the current insurance practice and contractual obligations. We still do not admit contractual liability for the payment of this death claim based on the material non-disclosure at application stage.
This incident has brought to our attention the deep emotional reaction to (what is effectively) the result of a violent crime. It has given us an opportunity to reconsider the standard approach normally followed in the industry and come up with a new solution.
Why has this solution been developed now?
The need for a solution like this has been clearly highlighted by the overwhelming societal response to the plight of families surviving violent crime, something that is unfortunately very prevalent in South Africa.
Payments under this solution will be considered ex-gratia payments and is distinct from any of Momentum’s contractual relationship with any party to the insurance contract.
It is offered as a gesture of goodwill in worthy instances as determined by Momentum in its sole discretion. We commit to following this new approach for all future claims.
Was it the pressure from social media that led to this decision?
The feedback from the media, our clients and our own financial planners and staff was very valuable in highlighting the need for a solution that gives clients extra peace of mind when dealing with a death resulting from violent crime.
Will this impact my policy premium?
Because this is an ex-gratia payment only considered in specific circumstances, and not a change in benefits, there is no additional charge for this.
Any payments associated with this solution will be paid by Momentum as an ex-gratia payment, outside of the insurance policy, but not in addition to the insurance policy provisions.
It will not affect the premiums of any existing or new clients.
What constitutes: death as a result of a violent crime?
The intention is to cover all deaths as a result of violent crime, such as murder.
Each case will be considered on its own merit by Momentum, based on all relevant information. We are working around the clock to more clearly define what this will entail.
In addition to the above frequently asked questions, FAnews asked George Kolbe – Head Insurance Marketing at Momentum – a few additional questions.
What would happen in a case of a planned hit/murder? For example: Brett Kebble and Anni Dewani
The question has various interpretations, therefore I will use examples to position different outcomes. If we assume that a life assured has a R4 million death benefit:
Scenario 1 - If it was a normal underwriting case, with full disclosure, the full life cover benefit of R 4 million would be paid out to the beneficiaries, contractually, unless it was an “assisted suicide” within the two year suicide exclusion period.
Scenario 2 - If it was a case where there was material medical non-disclosure (i.e. it qualified for the new solution with the guaranteed ex-gratia payment), a sum equal to the death benefit on the policy (in this case the maximum of R3 million), would be paid out as an ex-gratia payment, unless it was an “assisted suicide” within the two year suicide exclusion period.
In either of the above scenarios, if it was a “hit/murder” arranged by a beneficiary, we would still pay out the death benefit, but only to the estate of the deceased, not to the beneficiary.
Often, the end result of a violent crime is not always death. Some people are left with disabilities which are in some cases severe. Would Momentum be making a payment in these cases?
I assume the question relates to the new guaranteed ex-gratia payment solution. No payment will be made on disability benefits, the solution only applies to death benefits. The principle on which we introduced the solution for the victims of violent crime was that the dependents are suffering the consequences of the insured life’s non-disclosure and the insured life is not benefitting directly from the non-disclosure decision. If this solution is applied to disability claims, the insured life who non-disclosed would be benefitting directly from lying.
We maintain that the starting point of any contract is honesty between the contracting parties. Life insurers ask for full disclosure and honesty during the application stage. There are no grey areas, clients must always disclose all required information. We cannot make contractual pay-outs where benefits were purchased on a dishonest basis. Applicants are informed at application stage of the risks of non-disclosure, which includes non-payment of claims. If a person applies for insurance cover and answers ‘no’ to a question, and they know the answer should be ‘yes’, they are lying and not acting in good faith and should not be rewarded for doing so.
Momentum found an innovative solution to an emotionally charged situation, but we cannot ignore the fact that a precedent may have been set for other cases of a similar nature. Has the industry been disrupted in a good or a bad way? Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts firstname.lastname@example.org.
This article is published courtesy of FANews