A string of traumatic events left a former stockbroker with PTSD and bipolar mood disorder, but the evidence of this only came to light after his policy expired. Image: Moneyweb
Discovery Life has filed a notice for leave to appeal a high court judgment that ordered it to pay a former stockbroker, who was charged and acquitted of murdering his girlfriend, more than R25 million after it previously repudiated his permanent disability claim.
Discovery on Thursday confirmed it had filed the notice for leave to appeal on Wednesday this week but did not know at this stage when the appeal will be heard.
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The company said it has studied the judgment and believes it could potentially have far-reaching implications for the life insurance industry.
“The judgment instructed Discovery Life to pay the claimant in respect of his permanent disability claim, even though it was not possible to determine the permanency of his disability at the time of his claim – in fact, not even until three years after the policy had lapsed.
“The implication of this is that insurers are liable to pay insurance claims when claimants only qualify for the conditions covered under the policy a significant amount of time after the policy has lapsed,” it said.
“This could impact premiums for disability and severe illness cover as well as the insurability of certain conditions across the industry.
“We are therefore considering the options available to us to obtain legal certainty.”
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The former stockbroker, who was not named, claimed he became totally and permanently unable to carry on that work at some point between 28 December 2014 and 30 November 2015.
This followed him suffering a string of deeply traumatic events during that time that have left him with a combination of post-traumatic stress disorder (PTSD) and unspecified bipolar mood disorder.
These events were the drowning of his girlfriend on 28 December 2014 in a swimming pool at a resort in Mauritius where he owned a villa, his arrest on 2 January 2015 on suspicion of murdering his girlfriend, and being detained pending the trial.
He was eventually acquitted of his girlfriend’s murder and returned to South Africa in March 2016, where he was hospitalised in Pietermaritzburg and diagnosed with PTSD and major depression.
In a judgment handed down in the Johannesburg High Court on 31 March 2023, Judge Stuart Wilson said there was no serious dispute between the parties that, over eight years after the events that triggered the former stockbroker’s condition, he was unable to work as a stockbroker and there was no sign he would be able to do so in the foreseeable future.
He said the next question is whether, on a balance of probabilities, the former stockbroker’s condition permanently incapacitated him on or before 30 November 2015, when his policy with Discovery expired.
Wilson said that while nobody could have identified the permanency of the former stockbroker’s condition on 30 November 2015, it is clear on the evidence the condition was in fact permanent, even if the evidence necessary to establish that permanence has only subsequently come to light.
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Discovery Life argued that the legal question before the court was not whether it had been established as a fact the former stockbroker had become permanently incapacitated by that date, but whether Discovery had unreasonably concluded that he had not.
Wilson said Discovery’s liability under the policy was triggered at the point the former stockbroker’s inability to perform as a stockbroker objectively became permanent, but its duty to pay out was only triggered once there were facts in existence that would have satisfied a reasonable insurer that his incapacity had become permanent.
He said the first triggering event that established Discovery’s liability was the onset of the former stockbroker’s permanent incapacity on or before 30 November 2015.
The second triggering event, which established Discovery’s duty to pay out because facts existed that would have satisfied a reasonable insurer that the former stockbroker’s incapacity was permanent, happened in April 2019 when the former stockbroker’s treating psychiatrist formed the view there was no realistic prospect of significant improvement in his condition.
Wilson said it follows that Discovery became liable under the policy on or before 30 November 2015 and had a duty to pay out, at the very latest, by 1 May 2019.
He said even on the interpretation most charitable to Discovery, “its position was far from reasonable”.
Wilson said Discovery’s position entailed the proposition not just that the former stockbroker had to have suffered the onset of a permanent incapacity on or before 30 November 2015, but that he had to have assembled, by that date, all the information necessary to prove it.
“That was obviously impossible. It was also inconsistent with Discovery’s policy, properly construed.”
The judge continued: “Once it is accepted that there is a difference between the onset of a permanent incapacity and the existence of facts that would satisfy a reasonable insurer that the capacity is indeed permanent, then there is no rational basis on which the insurer may decline to consider documents generated after the policy has expired.”
He said to assess whether the former stockbroker’s condition was permanent, Discovery had to have regard to evidence generated well after his policy expired.
“In closing the door to that evidence when it repudiated [the] claim, Discovery was plainly unreasonable,” he said.
Discovery Life was ordered to pay the former stockbroker almost R25.1 million, with interest on the amount at the prescribed rate from 1 May 2019 to the date on which it is paid.
This article originally appeared on Moneyweb and was republished with permission.
Read the original article here.
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