Bogus funeral cover leaves client in lurch

Consumers must ensure they buy their funeral cover from a registered provider backed by a registered insurer.
Consumers must ensure they buy their funeral cover from a registered provider backed by a registered insurer.
Image: Moeletsi Mabe

Martha Bitterbos learnt the hard way that failing to check that you are buying funeral cover from a registered provider backed by a registered insurer can leave you without funds when a relative dies.

Although the ombudsman for financial services providers has ruled that the woman who sold Bitterbos the funeral cover should pay her out for her loss, the cover was not there when she needed it.

The Ombud for Financial Services Providers Noluntu Bam recently issued a ruling in which she ordered Miriam Maketlo, the owner of Jo-Meri Funeral Services in Kimberley, to pay R10000 to Bitterbos. Maketlo/Jo-Meri Funeral Services has never been registered as a financial services provider, the ombud said.

Bitterbos bought funeral cover in February 2013. The policy was underwritten by KGA Life, which is a registered insurer and authorised financial services provider.

One of the lives insured under the policy was Bitterbos's aunt, who was dependent on her. In April 2015, after her aunt died, Bitterbos lodged a claim with Maketlo but it was ignored, leaving her with no option but to fund the funeral expenses out of her own pocket.

Bitterbos then turned to the office of the ombudsman for help to claim from Jo-Meri Funeral Services the R10000 benefit promised in terms of the contract.

The ombud's office referred the complaint to Jo-Meri Funeral Services for the funeral home to resolve the problem with its client, but this notice was ignored. So, the ombudsman accepted the consumer's claim and recommended that Jo-Meri Funeral Services pay the consumer the R10000. Failure to respond to a recommendation made by the ombudsman results in a final determination being made against the provider.

The determination, which has the status of a court order, revealed that during its investigation, the ombud's office established from KGA Life that the agreement between it and Jo-Meri Funeral Services had been cancelled on December 1 2014, following the funeral cover provider's failure to pay the premiums.

The ombud's determination said there was no evidence that Jo-Meri Funeral Services had any other underwriter involved in its business, yet it continued collecting premiums from clients.

Jo-Meri Funeral Services was under an obligation to pay the consumer the benefit in terms of the agreement, the ombud said, and duly ordered that the owner of the funeral home pay Bitterbos R10000.

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