Ombud offers quick route to resolving life assurance complaints

long term insurance

Long-term insurance products, which include life assurance, disability assurance and funeral cover, can be complicated. When disputes arise between assurers and consumers, it is almost always when policyholders want to claim their benefits. Here’s how you can seek redress if you have a dispute with a life assurance company.

If you have a dispute with a life assurance company, resorting to the courts to protect your rights can be expensive and time consuming. You could wait for two or more years after a summons has been served before your case is heard, Brian Galgut, the ombudsman for long-term insurance, says.

The Office of the Ombudsman for Long-Term Insurance was established to provide policyholders with a means of resolving disputes without having to turn to the courts. The Long-Term Insurance Ombudsman’s office is one of six ombuds offices in the financial services sector [in 2008], of which four are voluntary and two are statutory. A voluntary scheme is one that is established by the relevant industry and to which virtually all industry players belong, although they are not obliged to do so. Statutory schemes are established by law and automatically cover all industry players.


Although the specific complaint resolution processes adopted by each of the six schemes differs, all of them aim to make rulings that are fair and equitable. The office of the long-term insurance ombudsman does not require you to fill in a form when you complain, but your complaint must be in writing – an email, fax or letter. The office will assist you if you are unable to write up your complaint yourself.

Both parties to a dispute are given an opportunity to respond to the factual and legal submissions of the other party. So, once you submit a complaint to the ombudsman, it is forwarded to the assurer concerned. The assurer’s response is then forwarded to you.

“This exchange goes on until both parties have had the full opportunity to respond to all the allegations and submissions by the opposing party,” Galgut says. During the course of the exchanges, either you or the assurer may be called on to produce relevant documents or statements from witnesses.

Galgut says if his office feels a settlement is possible, it will invite the assurer to make an offer, at the same time suggesting the terms that his office considers suitable. “Ninety-five per cent of cases in which the complainant succeeds are settled this way,” he says. The remaining complaints require a determination or ruling.


“We never make a final ruling without first making a provisional ruling,” Galgut says. In a provisional ruling, the ombudsman provides comprehensive reasons for his determination but gives the consumer and the assurer a final opportunity to furnish new facts or submissions that might throw a different light on the matter.

If there are no new facts or submissions, the provisional ruling is accepted as the final ruling. If, based on the written material before the ombudsman, a vital dispute of fact arises that cannot be resolved, he may (where possible) hold a hearing so that the relevant witnesses can “testify” and be questioned by him.

Galgut says it is important to remember that although the final ruling by the ombudsman is binding and legally enforceable on the assurer, it is not binding on the consumer. Even once a final ruling has been made against you, you retain the right to sue the assurer in court.

If you are unhappy with a ruling and you don’t want to go to court, the ombudsman’s office has an appeal process in terms of which it appoints a retired judge to re-hear your case. An appeal against a determination is not an appeal in court, so there are no legal fees because parties usually represent themselves. If you choose to have legal representation, you would have to pay their fees.

However, the retired judge charges a fee, which could be up to R20 000 for a case that takes the judge two months to review. The judge can call for new evidence, conduct a full hearing or correspond with those involved. The party that brings the appeal has to pay about R10 000 into a trust account. If the appeal is successful, the money is paid back. If the appeal is unsuccessful, the money is used to defray the judge’s costs.

However, you will only pay a maximum of R10 000, regardless of what the judge’s costs amount to. The rest of the judge’s costs are paid for by the ombud’s office. If your appeal is unsuccessful, you can still take the assurer to court if you wish to do so. Galgut says that in the past four years there has been an average of two appeals a year.


Most of the complaints received by Galgut’s office last year related to claims that were declined because policyholders had either failed to meet their policy conditions or did not understand those conditions correctly. The next highest category of complaints related to poor communication from life assurers.

Galgut says the definition of disabilities and the exclusions related to disabilities are a common cause for complaint. “The average man may not understand the true implication of the disability benefit being offered to him,” the ombud says.

A typical case the ombud must rule on

Brian Galgut cited the following case, which is currently being investigated by his office, as an example of the type of complaint on which he has to rule. The complainant is a widow. Her husband had group life cover and his death benefit was valid if he was in the company’s employment when he died. The company suspected he had been running his own business illegally from its premises. Rather than face a disciplinary hearing, the man offered to resign, which the company accepted. September 30. 2005 was to be his last working day. On the night of September 30, he committed suicide. His body was only discovered the next morning and the date of death was recorded as October 1. His family applied for a court order to declare that he had died on September 30. After a lengthy court process, they obtained a High Court ruling stating that it was likely that he had died on September 30. However, when the company’s group scheme submitted a claim to the assurer, it was declined for the following reasons:

  • His employment with the company ended at the close of working hours on September 30 and not at midnight;
  • The evidence did not prove that his death occurred before midnight on September 30; and
  • The claim should have been lodged with the assurers within six months of the death. But because of the protracted court case, the claim was only lodged two years after the man’s death.


  • This article was first published in Personal Finance newspaper on 4 October 2008. 

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