The public reaction to Momentum Life’s decision to repudiate a death claim on account of material nondisclosure was quite astonishing. It verged on the hysterical and exposed the shocking level of ignorance regarding the legal and financial foundations of the insurance industries, both long and short term. The fact that the ombudsman for long-term insurance agreed with the insurer seemingly counted for nothing. As stakeholders, clients of an insurer expect their premiums to represent value for money based on the experience of a pool of honest participants. As significant stakeholders, the shareholders expect to earn a reasonable return on their substantial capital investment. Paying a claim on a contract that is void, whatever the cause, undermines the fundamentals of insurance. Business Day’s cartoon on November 21, which lambasted Momentum Life, came as a huge disappointment. As a responsible financial publication, Business Day ought to educate and enlighten, rather than take chea...
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