Insurers say no to 243 claims

Figures published by the Association for Savings and Investment SA (Asisa) show that life assurance companies declined to pay 243 claims for death benefits against fully underwritten individual life policies during 2019, with most citing non-disclosure of material information as a reason for their refusal to pay.

Other reasons for declining to pay claims included cases of suspected fraud, suicide, and events leading to the death of a policyholder that were specifically excluded under the policy.

Rosemary Lightbody, senior policy advisor at Asisa, says declining to pay a claim is a “big deal” for insurance companies.

“Obviously, clients want insurers to pay their claims quickly and insurers want to pay out quickly,” she told Moneyweb.

“It is in any insurance company’s best interests to pay claims quickly, but it is just as important to ensure that claims are paid correctly to the correct beneficiary.

“Unfortunately, the insurance industry is a target for criminal syndicates due to the large amounts of money involved.”

Lightbody says death claims will always be paid, provided the claim is not fraudulent and the policyholder did not:

• Commit suicide within the first two years of taking out the policy.
• Withhold important information from the insurer when applying for the policy.
• Die as a result of an exclusion.

The Asisa figures show that the industry paid 99% of all claims received, refusing only 243 from a total of 27 547 claims submitted.

The majority (145) were declined due to non-disclosure of material information, while 40 were refused due to suicide within the stipulated period and
31 for underwriting exclusions.

Insurers refused 27 claims on the grounds of fraud. The total value of claims paid increased by 62% since 2014, to reach R16.7 billion last year.

However, the average amount paid under policies increased at nearly twice the rate – by 116% – as the number of claims has declined steadily year after year.

The average settlement for death benefits increased from R282 800 in 2014, to more than R611 000 in 2019, ranging from fairly small policies to some of several million rand.

This article first appeared on Moneyweb and was republished with permission.

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