CR360 Suicide Clause
Insurer not liable for any delay in issuing of policy or provision of incorrect commencement date to insured.
The insured, a farmer, applied for a policy through his broker, requesting a commencement date of 1 December 2009. Upon receipt of the application on 30 November 2009, the insurer requested a short medical report and blood test results. The insured’s doctor was on leave in December 2009 and only completed the requested medical information on 8 January 2010. On 14 January 2010 the underwriters requested further medical information which was furnished to the insurer on 19 January 2010, on which date the insurer also accepted the application. The annual premium was paid to the insurer on 20 January 2010 and the insurer issued the policy at standard rates with the commencement date of 1 February 2010.
The insured ceded the policy to an agricultural co-op that had provided a loan to him. The insurer dispatched the policy documents to the cessionary, with the consent of the insured. A copy of the policy was submitted to the broker.
The insured experienced dire financial constraints on the farm and was apparently being pressurised by the co-op to pay some of the debt owed to it, or lose the farm, it appears, from the information supplied to the office. The insured did not have a copy of the policy and he made two telephone calls to his broker on 19 January 2012 in order to ascertain the commencement date, whereupon he was (incorrectly) advised it was 1 December 2009. Based on this date, which is the date that was originally requested per the quotation, the two year suicide exclusion period would have expired on 2 December 2011. In fact, after all formalities had been complied with the commencement or start date was 1 February 2010 and the two year period would have expired on 2 February 2012. On 20 January 2012 the insured committed suicide. His wife submitted a claim to the insurer which was declined by relying on the following provision in the policy:
“No benefits will be payable if the life assured dies by his or her own act within two years of the issue date or date of any revival”.
The widow submitted a complaint to this office, arguing that the quotation clearly states that the commencement date was 1 December 2009 and the broker had confirmed that the date provided to the insured when he called the broker’s offices on 19 January 2012. If 1 December 2009 had been the commencement date, the suicide had occurred outside of the two year period. The complainant argued that the insured had timed his suicide based on the information about the commencement date. It was also her view that the insurer had delayed the issuing of the policy from the date it received the application (30 November 2009) to the date of commencement (1 February 2010).
The office considered the complaint and came to the following conclusion:
• The policy does not refer to the quotation as forming part of it.
• Even if one considers the quotation as an offer, in the case of a discrepancy, the policy will prevail.
• The offer is in any event subject to the conditions set out in the schedule.
• The policy provides that the policy summary must be read with it.
• The policy summary defines the “issue date” as 30 January 2010 and the “start date” as 1 February 2010.
• The insurer did not unduly delay the matter. It had acted promptly and reasonably in assessing the application. The insurer advised that the start date is the first day of the new month following the acceptance of the application. The delay was unfortunately largely attributable to the fact that the medical information had only been furnished after the return of the insured’s doctor from leave in December /January 2010.
• The insurer was within its rights to decline the claim in view of the suicide falling within the two year waiting period.