CR67 Transfer of funds from one insurer to another

C67

Transfer of funds from one insurer to another– delay causing financial loss-damages

Background

The complainant had a policy with insurer A. As he was dissatisfied with its performance he arranged on 29 September 2003 for the funds to be transferred to insurer B to be invested in a living annuity. On the same date he notified insurer A of his intention by completing a written mandate and he also completed the application form for insurer B. On 6 November 2003 insurer A sent a master agreement to insurer B as a step which it considered necessary in terms of the FSB Directive 135 in order to effect the transfer, which agreement was to be returned timeously in order for the transfer of funds to occur by 1 December 2003. Insurer B disputed the necessity for such an agreement as one had been concluded between the two companies in February 2003. Insurer A did not agree that the February 2003 agreement was sufficient and insisted on the fresh agreement which was in fact a tripartate agreement requiring also the signature of the complainant. After much discussion insurer B did on 9 December 2003 sign the agreement and the complainant did likewise on 9 January 2004. The delay in the complainant signing the agreement was a result of the agreement having been sent to his broker who was on vacation at that time. On 4 February 2004 insurer A transferred the funds to insurer B. The complainant calculated that he had suffered monetary loss in the amount of R40 168.58 and he was of the opinion that insurer A was responsible for this loss. Insurer A denied its responsibility and blamed insurer B for the loss due to the fact that insurer B had delayed signing the agreement.

Discussion

It is clear from the FSB Directive 135 that the following legal documents are required for a transfer of funds in terms of Section 37 (2) of the Long-Term Insurance Act:

1. a master agreement between the two insurers regulating the transfers;
2. a written statement with details provided by the transferor insurer;
3. a written statement with details provided by the transferee insurer;
4. a written consent by the policyholder.

Insurer B alleged that the master agreement entered into by insurers A and B in February 2003 should have been sufficient and that it was therefore unnecessary to enter into a tripartite agreement as required by insurer A. Insurer B should, however, from its side have provided its written statement as required in point 3 above and thereby placed the onus on insurer A to conclude the transfer as it already had in its possession the mandate from the complainant to so transfer the funds. We suggested that insurer A was responsible for the delay that caused the complainant’s loss, alternatively that the insurers should bear joint responsibility. Insurer B rejected this suggestion on the grounds that insurer A had unnecessarily insisted on a new master agreement and even after the new agreement had been signed there was a further delay by insurer A in effecting transfer of the funds.

Result

Insurer A accepted our suggestion that it was responsible for the loss suffered by the complainant and it paid the full amount of R40 168.58.

MFBR
October 2005

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