Momentum lessons: full disclosure is non-negotiable
A closer look at what the Ganas saga means for your life policy
In the aftermath of the Momentum saga many people are unsure about what the outcry means for them and their cover. Financial advisers and call-centre operators have told Money that they have fielded many queries from concerned members of the public.
In order to understand what the Nathan Ganas episode means for you and your life cover, it is important to stay abreast of what has happened with the case.
Here's a summary: Ganas was killed in a hijacking. Momentum declined to pay out to his widow saying he did not disclose his high blood sugar levels, and therefore had entered the contract in bad faith. There was a huge public outcry. Momentum then announced they had created a new product, meaning Mrs Ganas would get the money.
However, Momentum said that it had not reversed its decision to reject the claim, saying that a full disclosure of medical history remains non-negotiable.
“A full disclosure of medical information remains non-negotiable. Our decision is sound in terms of the current insurance practice and contractual obligations. We still do not admit contractual liability for the payment of this death claim based on the material non-disclosure at application stage,” the insurer said.
It is a common misconception that nondisclosure has to be linked to the claim event for the insurer to be able to repudiate the policy. That is not so.Office of the ombud for long-term insurance
Instead, the insurer said it had taken note of the public interest and created a new product out of goodwill that seeks to take the violent crime rate into consideration.
“It is offered as a gesture of goodwill in worthy instances as determined by Momentum in its sole discretion. We commit to following this new approach for all future claims,” Momentum said.
The FSCA and ombud for long-term insurance have since come out and reaffirmed the principle of nondisclosure and why it is important to the industry. Their reaffirmation of entering into a contract with good faith was a nod to Momentum’s initial stance.
What is the most important thing that we have learnt?
Disclosure does not have to be linked to the claim event
The deputy long-term ombud Jennifer Preiss told Money that “it is a common misconception that nondisclosure has to be linked to the claim event for the insurer to be able to repudiate the policy. That is not so”.
Based on her proximity to disputed cases, Preiss shared advice with Money on how to be safe and not sorry.
Follow these five steps to avoid a nondisclosure dispute:
- Disclose everything you can in response to questions asked in the insurance application process.
- Always give too much information than too little.
- If you can’t remember all your medical information, ask for more time so that you can check with your doctor or medical aid before answering the questions.
- If you are on medication, share the name of the medicine.
- If you have symptoms or things that don’t feel right, even if a doctor has not yet given a definite diagnosis, disclose the symptoms.
With this is mind, Money spoke to Momentum CEO Johann le Roux, to clarify a few points around life assurance and health.
Money: Is there a burden on insurers to show they have clearly and without confusion explained the full ramifications of not disclosing something?
Le Roux: Yes, in terms of industry regulation product providers are required to implement certain policies and procedures to ensure specific disclosures are made to clients. These disclosures must be made in “plain language” and must enable a client to make an informed decision when entering into the contract. Momentum has applied these principals diligently and consistently.
Money: Is the life industry stacked against people with chronic conditions? If not, how do you suggest people with such conditions navigate the terrain?
Le Roux: The best time for a person to acquire cover is when they are healthy. However, if you develop any medical condition that you were unaware of, or which didn’t exist at the time of taking out the policy, you will be covered. This is exactly the purpose of life insurance – to cover you for these events. If you find out later that you have a condition or if your health deteriorates, you are not obliged to notify the insurer regarding the existing policy but will have to notify the insurer if you take up additional cover.
In terms of navigating the terrain, the best policy is to act in good faith and fully declare all information relevant to your condition.
Money: Let’s talk about entering into a contract in good faith. Please give us a fail-safe approach to take? Are you trying to find reasons not to pay? Because that's been the public’s accusation.
Le Roux: It is in any client’s best interest to be aware of their medical health, not only for insurance purpose but in general; they should have insight as to why their doctor prescribed medication, or why an investigation was being done, or why they were referred to a specialist.
Any client will be expected to disclose with honesty. They also need to have a clear understanding of the documents they are signing and if they are unclear in any way, to speak to their financial adviser.