Momentum pays families of more murdered policyholders after public outrage over rejected claim
Sometimes‚ you can be right and wrong at the same time.
That realisation saw insurance company Momentum pay Durban widow Denise Ganas R2.4m in November 2018‚ despite its legitimate rejection of a claim on her murdered husband Nathan’s life policy‚ based on his failure to disclose key medical information when he took out the policy in 2014.
And thanks to her‚ in the five months since that case hit the headlines‚ four other families of policyholders who were murdered - one of them 14 years ago - have received surprise payments of an average of R1.2m each.
As in the Ganas case‚ their claims were rejected on the grounds of material medical non-disclosure at the time the policies were taken out.
Momentum came in for massive public condemnation for its controversial rejection of the Ganas claim.
The insurer said Ganas - who was murdered during a hijacking in 2017 - failed to disclose to them that he’d had a blood sugar test two weeks before he applied for the life policy‚ and that the results were material - in other words‚ he ought to have known that he was obliged to disclose that key medical information.
When an insurer is of the view that withheld medical information was so serious that they wouldn’t have granted the policy at all had they known about it‚ they can deny the claim outright and cancel the policy.
That’s what Momentum did in the Ganas case‚ and his widow Denise saw not a cent of her husband’s policy’s R2.4m payout benefit.
She lodged a complaint with the Ombudsman for Long-Term Insurance‚ which sided with the insurer.
Aggrieved‚ she went public with the story.
Public outrage over the perceived injustice was intense. "The man did not die of dishonesty‚” said a radio show host at the time. "He died in a hail of bullets! That’s the only relevant fact when it comes to paying out!"
Actually‚ it wasn’t - a consumer’s failure to disclose information critical to the assessment of risk when applying for an insurance policy is valid grounds for an insurer to later reject a claim and cancel the policy.
In cases where the withheld information would have resulted in a higher premium‚ based on the increased risk‚ an insurer is compelled to "reconstruct the policy" and pay out the benefit‚ having deduced the extra premium from inception to the time of the claim.
In the Ganas case‚ within a day‚ Momentum went from telling the media: "No‚ we will not pay out; we need to protect the integrity of our industry"‚ to announcing a creative "solution" that did just that‚ but also acknowledged public sentiment around the issue.
"We have learnt a great deal‚" Momentum said this week. "The more we tried to explain how right we were from a legal and contractual perspective‚ the more people were telling us how wrong it felt."
The company’s solution involved the insurer paying an amount equal to the death benefit - limited to a maximum of R3m - in the case of violent crime deaths‚ regardless of previous medical history‚ and even when material medical non-disclosure impacted the legitimacy of the contract.
The payouts were to be fully funded from Momentum’s profits and not from its clients’ premiums.
So Denise Ganas got that R2.4m after all‚ and Momentum announced that the "violent crimes benefit" would apply to all past‚ existing and future clients.
This week TimesLIVE asked Momentum how many families whose loved ones had died as a result of violent crime had since received those "solution" payouts.
"To date we have paid out five claims to the value of R7.3m – including the Ganas claim‚" Momentum said.
"We conducted an internal audit to proactively establish which other families qualified to receive payouts under the violent crimes benefit.
"But shortly after announcing this new benefit‚ the impacted families contacted us and we were ready to pay their claims."
All four of the other claims were filed and then rejected due to material medical non-disclosure before "the Ganas matter" and all four insured were also murdered - one in 2005‚ another in 2006‚ and the other two in 2017.
"We repudiate only four out of every 1‚000 claims‚" Momentum said‚ "better than the industry standard."
"So we really took the criticism [about the Ganas case] to heart.
"We have learnt that as an industry‚ there is much more we can do to bridge the gap between what clients understand and expect from insurers‚ and what the industry delivers and communicates.
"In general‚ there is a lack of awareness and understanding around industry principles‚ such as non-disclosure‚ and it is our duty to bridge this gap.
"Because of this realisation‚ we are doing research to understand what the gaps are and to develop targeted communication to address these shortfalls."