Call: 0860 103 236

For up to date information about the pandemic visit

CR52 Values – surrender – wrong value quoted – estoppel


• Values – surrender – wrong value quoted – estoppel

The complainant had an investment with the insurer since 2000. Two years later, due to poor portfolio performance, she decided to request the surrender value. Her bank provided her with a quote indicating that the surrender value was R62 123,43 but only R40 327,54 was deposited into her banking account.

When she complained, the insurer advised her that the quoted surrender value was wrong as the insurer had omitted to include an earlier partial surrender of R30 000. The error was picked up on the date of payments and corresponding amendments were made. An actuarial certificate confirming the surrender value of R40 327,54 was provided.

The office’s prima facie ruling was that the complainant was entitled to only R40 327,54. The insurer could only be held to the false representation (that R62 123,43 was owing) if it could be estopped from raising the mistake as a defence. Such a case was not made out.

However, since the complainant alleged that she would not have surrendered the policy if it had not been for the false representation, we ruled that she should be given the option of restoring the status quo of the policy, namely reversing the surrender, repaying the sum of R42 357,54, and having the investment reinstated to what it was before, as if no payment had been made.

The insurer thereupon offered to reinstate the policy to current fund prices but the complainant disagreed. She contended that she was not in a financial position to refund the surrender value. She made a counter-proposal to the insurer, which it was not prepared to accept.

On reconsidering the matter the office decided to pursue the possibility of a settlement. We recommended a 50% settlement basis, namely a payment of half the difference of the surrender value quoted and the value actually paid i.e. R10 897,94.

The reasons advanced by the office were two-fold: the complainant had from the outset stated that she surrendered the policy on the strength of the false representation. She therefore acted to her detriment by the early termination of the policy; having made the initial mistake, the insurer should at least have informed the complainant that the amount quoted was incorrect prior to making the payment, thereby giving her the opportunity to reconsider terminating the policy.

The recommendation of settlement was accepted by both parties and the amount was duly paid.

Subscribe to our Newsletter