Conduct authority will take lessons from Ganas case
The FSCA will review the public’s response to the Ganas case to help the industry identify and fix issues that have led to consumers believing they were treated unfairly
The Financial Services Conduct Authority (FSCA) is satisfied with the way in which Momentum responded to the public outcry following its initial refusal to pay the R2.4m claim on the life on Nathan Ganas.
He died from gunshot wounds while protecting his wife in a hijacking.
The saga resulted in Momentum introducing a new benefit that will pay out up to R3m in cases where claims arise from violent incidents. Ganas’s claim was rejected because he allegedly failed to disclose that he had high blood sugar when he took out the policy in 2014. According to the policy rules, nondisclosure can result in the policy being declared null and void.
Caroline da Silva, divisional executive for regulatory policy at the FSCA, says the regulator is pleased that Momentum has addressed public criticism, because the decision affects not just Ganas’s widow, but also other policyholders and their beneficiaries who may believe they have been treated unfairly.
She says the FSCA will, however, review the public’s response to the Ganas case to help the industry identify and fix the issues that have led consumers to believe they were being treated unfairly.
In a statement, the FSCA said it was committed to ensuring that customers felt empowered, protected and having confidence that firms will treat them fairly.
Da Silva says the Momentum saga has shown that there is a very real disconnect between what the customer thinks is fair and what insurers think is fair.
In its conversation with Momentum, the FSCA acknowledged that the life company may have taken the correct decision in terms of the law and industry practice, but was it really fair from a customer perspective since consumers had such a “visceral response” to the news that the claim was rejected?
Da Silva says Momentum could have decided to make an ex gratia payment to Denise Ganas, but this would have been a poor outcome. It would have sent a message that it is okay not to disclose your health conditions on your policy application form, she says.
Instead Momentum decided to address the perceived lack of fairness, she says.
Da Silva says the specifics of the Ganas claim are being dealt with by the Life Ombud’s office and it is not for the regulator to second guess the ombud. Ganas’s widow, Denise, has lodged an application for leave to appeal the ombud’s ruling in favour Momentum.
What the FSCA will take further is what the case teaches about treating customers fairly and what the industry needs to do to address the perceived unfairness — be that attempting to educate consumers about their role in an insurance contract or interrogating industry practices that may result in the perception that life assurers are unfair, she says.
Da Silva says the life industry needs to look at its underwriting practices at inception and at claims stage and the potential costs that would be added to premiums if more underwriting were done at the inception of a policy.