CR229 Misrepresentation – Post Contractual
Misrepresentation – Post Contractual
The deceased was the policyholder of a policy, administered by the insurer, which provided for the payment of a percentage of the sum assured in respect of certain specified benefits. So for example, hospitalisation would be calculated as Day 1: General Ward 0.225%, High Care 2.70% or Intensive Care 5.175%.
The deceased was on her way to work when she purchased a packet of naartjies from a street vendor, unaware that the fruit contained a poisoned organic substance used in the spraying of fruit trees. After having eaten of the fruit she took ill and later had to be hospitalised for poisoning. Due to further complications her condition worsened and she died.
The complainant, the son-in-law of the deceased, approached our office following the insurer’s refusal to settle the balance of the hospital account. According to the complainant his mother-in-law became ill on 8 August 2005. She was admitted to the Medi-Clinic in Tzaneen.
Within hours of her admission she underwent an operation and was admitted to ICU under an induced coma that lasted for two weeks. On 10 August 2005 the complainant made contact with the insurer’s call centre to arrange for an authorisation number that would be utilised for the payment of hospital bills that were to accrue. He alleged that the call centre consultant assured him that cover would be unlimited and that the hospital staff also telephoned the call centre the following day and was also re-assured of unlimited cover.
The insurer subsequently made two payments in terms of the hospital bill, i.e.
R321 135-44 and R194 684-45. The complainant’s family was left with a shortfall of approximately R400 000-00 in unpaid bills.
We were of the view that the policy benefits, on a proper interpretation of the contract, were determinable as a defined percentage of the sums assured and, as such, that it was not indemnity insurance. Cover was limited not in the amount that may have ultimately been paid but by the formula used to determine such amount. That, however, was not the nub of the complaint. The complainant contended that he was given the assurance by the call centre consultant that the cover would be unlimited and that the hospital staff were also reassured of unlimited cover. We later obtained a letter from the clinic supporting the complainant’s contentions.
We were of the view that the information given out by the call centre, both to the complainant and to the hospital, would have been misleading to a layman and may well have induced the family of the deceased to decide on treatment they would not otherwise have considered.
The insurer, on the other hand, maintained the view that it had met its contractual obligations.
The insurer made an offer of R20 000-00 which was declined by the complainant and resulted in us proposing that a meeting be held between the parties.
Relevant factors were:
• that the terms of the contract were clear that cover was not unlimited;
• that the insurer’s product was not an indemnity policy, i.e. the policy did not purport to settle the balance of an outstanding amount in the event of a defined occurrence;
• that in terms of the contract the insurer was liable for the benefits provided by the policy and that in the light of the feedback provided by the insurer, it had met its contractual obligations;
• that there was an obligation on the family to consult the terms of the policy, especially when matters took a turn for the worse and it became apparent that heavy expenses would be incurred;
• that the insurer’s offer of R20 000-00 was inadequate, in the light of the impression created by the insurer’s employees when enquiries were made.
A meeting was held in Johannesburg. After discussion the insurer agreed to reconsider it’s offer. It increased the amount to R150 000-00 which was again declined by the complainant. We proposed that the offer be enhanced by a further amount and both parties eventually settled on R185 000-00.