What's Happening?

Life insurers exist to help you. But you need to help them too.



Many people believe that insurers try to find reasons not to pay claims – but this couldn’t be further from the truth, says Brad Toerien, chief executive officer of life insurer FMI.

“The reality is that we actually encourage people to claim, because it’s the very reason for our existence, and, when we pay someone’s claim we deliver on our brand promise,” says Toerien. “We strive to pay valid claims as smoothly and as efficiently as possible, always striving to exceed a client’s expectations when it comes time to claim.”

Take the time to provide a comprehensive health history when applying for life cover – or even better, get a financial advisor or broker to check your application. That’s the advice from FMI, which says the number of insurance claims repudiated for non-disclosure is on the rise.

According to figures from the Association for Savings and Investment South Africa (Asisa), the South African life insurance industry repudiated a total of 5026 claims – worth over R1 billion – in 2017, mostly because of non-disclosure or misrepresentation of material facts at the time of application. FMI has seen non-disclosure claims rise from 2.4% in 2015 to nearly 8% in 2018 – giving many people the perception that insurers don’t want to pay.

“It’s vital that South Africans take the time to understand the product and cover they have selected and supply your insurer complete information when applying for a policy. We strongly encourage our customers to consult a financial adviser for additional information and advice to ease this process,” says Toerien.

It appears the rise in non-disclosure is largely due to customers’ circumstances rather than an increase in dishonest behaviour. This trend is largely indicative of:

  1. Stressful financial times and increasing illnesses – giving customers more to remember and disclose when applying for cover.
  2. Doctors are sometimes quick to prescribe medication that can result in more ‘pre-existing conditions’ which affect an individual’s ability to apply for cover without exclusions or loadings.
  3. Filling out applications in a hurry! Customers are time-pressed and forget to really consider their health history.
  4. Applying without the assistance of a Financial Advisers to check your application and ensure you’ve answered all questions accurately.

Toerien says insurers will always try to find a way to make paying the claim possible, even if there is non-disclosure. Asisa’s figures back him up: in 2017, life insurers paid out 99.75% of the value of all claims made, making benefit payments of R469 billion to beneficiaries and policyholders.

“Decisions to decline a claim have a real impact on people’s lives, so we try to make the best possible call for our customers with the information presented to us. But it’s critical for policyholders to understand that as an insurer we also have an obligation to all other policyholders, as non-disclosure and misrepresentation can have a dire impact on the entire industry’s premiums,” he said.

To make sure your claims will be paid, FMI offers these 5 tips:

  • Know what you’re buying. It’s vital that consumers take the time to understand the product and cover they have selected. FMI encourages its customers to consult a financial adviser or broker for additional information and advice.
  • Make full disclosure. Give complete, truthful information during the insurance application process. Rather give too much information than too little. If you’re seeing a doctor, say so. If you’re not sure about the type of medication you’re on, check.
  • Ask questions. If you’re not sure what a question means, or what information is being requested, ask. The consultant will be happy to explain.
  • Give details. Check with your doctor or medical aid for specific details of a condition or medication, if necessary.
  • Stay updated. If your personal circumstances change, make sure your insurance policy is updated accordingly to ensure your cover is up-to-date. For example, if you have an income protection policy, be sure to adjust it in line with your salary.

“The entire insurance industry is based on trust: and trust is a two-way street. We offer cover terms based on the information you give us. It’s so important for policyholders to understand the implications of non-disclosure, and the importance of understanding the requirements of their policy, so that they’re not disappointed when it comes to claim stage,” he said.

This process is a delicate balance between making sure the customer doesn’t have to jump through too many hoops to get sufficient cover for their needs upfront, and at the same time, to make sure they provide the insurer with enough medial history so that they can in turn offer fair terms of the policy upfront.