YF
Yvette F
1 reviews | Active since Dec 2017
18 May 2020, 11:54
OSTI aids insurers in abusing consumers
OSTI adds absolutely no value and is a glorified post office. In what *******ed world does the insurer break the law but get to keep the premiums? If policies are canceled the surely the premiums should be refunded with interest at the very least. This matter will be taken to constitutional court. OSTI is aiding abuse of consumer rights.
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Ombudsman for Short Term Insurance's replyOfficial
21 May 2020, 15:07Dear Yvette
You have not provided your OSTI reference number. I will however address the issue of Short-term Insurance cancellations generally, without dealing with the merits of your complaint specifically.
You have not provided your OSTI reference number. I will however address the issue of Short-term Insurance cancellations generally, without dealing with the merits of your complaint specifically.
An insurer is entitled in terms of the current law (Rule 7.3 of the Policyholder Protection Rules promulgated in terms of the Short Term Insurance Act 53 of 1998 as revised in terms of the new Insurance Act no. 18 of 2017) to amend or cancel a short term insurance policy by giving a 30 day notice to the policy holder. This excludes circumstances where the insurer is entitled to immediate cancellation of cover in terms of the policy provisions - such as material misrepresentations, non-disclosure, ***** and dishonesty. It is also important to note that the ombudsman does not have the jurisdiction (authority) to consider or decide on the merits of such a cancellation. If it is found by the ombudsman that the insurer followed due process and gave the mandatory 30 day notice to the insured, that policy will be considered lawfully cancelled.
With regard to what happens to all the insured’s money that was paid to the insurer over many years, we point out that the nature of the product is one based on risk. Short-term Insurance is unlike an investment policy which increases in value over time or a life policy which accumulates a surrender value, albeit the insurer’s exposure increased with additional premiums collected periodically.
The insurer assumes certain risks stipulated in the policy in exchange for a premium. If the risk materializes and the insurer has not by that time collected sufficient premiums to pay for the loss suffered by the insured, the insurer carries the loss and indemnifies the insured. If the risk does not materialize, then the premium will simply accumulate to cover any future losses that may occur. To the extent that no losses occur during the insured period, then insurer is under no obligation to refund such premiums as it had already assumed the risk. In other words, the premiums are not paid towards claims as such, but towards the transfer of risk from the insured to the insurer. In other words, because the insurer was on risk, it has earned the premiums.
Yours faithfully,
Ayanda Mazwi
Senior Assistant Ombudsman
Yours faithfully,
Ayanda Mazwi
Senior Assistant Ombudsman
Ombudsman for Short Term Insurance's reply21 May 2020, 15:07
Official
Dear Yvette
You have not provided your OSTI reference number. I will however address the issue of Short-term Insurance cancellations generally, without dealing with the merits of your complaint specifically.
You have not provided your OSTI reference number. I will however address the issue of Short-term Insurance cancellations generally, without dealing with the merits of your complaint specifically.
An insurer is entitled in terms of the current law (Rule 7.3 of the Policyholder Protection Rules promulgated in terms of the Short Term Insurance Act 53 of 1998 as revised in terms of the new Insurance Act no. 18 of 2017) to amend or cancel a short term insurance policy by giving a 30 day notice to the policy holder. This excludes circumstances where the insurer is entitled to immediate cancellation of cover in terms of the policy provisions - such as material misrepresentations, non-disclosure, ***** and dishonesty. It is also important to note that the ombudsman does not have the jurisdiction (authority) to consider or decide on the merits of such a cancellation. If it is found by the ombudsman that the insurer followed due process and gave the mandatory 30 day notice to the insured, that policy will be considered lawfully cancelled.
With regard to what happens to all the insured’s money that was paid to the insurer over many years, we point out that the nature of the product is one based on risk. Short-term Insurance is unlike an investment policy which increases in value over time or a life policy which accumulates a surrender value, albeit the insurer’s exposure increased with additional premiums collected periodically.
The insurer assumes certain risks stipulated in the policy in exchange for a premium. If the risk materializes and the insurer has not by that time collected sufficient premiums to pay for the loss suffered by the insured, the insurer carries the loss and indemnifies the insured. If the risk does not materialize, then the premium will simply accumulate to cover any future losses that may occur. To the extent that no losses occur during the insured period, then insurer is under no obligation to refund such premiums as it had already assumed the risk. In other words, the premiums are not paid towards claims as such, but towards the transfer of risk from the insured to the insurer. In other words, because the insurer was on risk, it has earned the premiums.
Yours faithfully,
Ayanda Mazwi
Senior Assistant Ombudsman
Yours faithfully,
Ayanda Mazwi
Senior Assistant Ombudsman
YF
Yvette F's updateReviewer Update
25 May 2020, 10:35It should be made public knowledge of how many claims have in fact been paid out on these illegitimate policies and the total value of the fund. Where is the transparency? Why OSTI would allow it considering there was no license in place is suspect. Should all policies not be deemed invalid and premiums paid back? This process is flawed and *******, meant to benefit Constantia and Prime Meridian who are still advertising. There is no warning to consumers with beware of these *****s. Mass action seems to be the only language OSTI and ******* companies will understand.
YF
Yvette F's update25 May 2020, 10:35
Reviewer Update
It should be made public knowledge of how many claims have in fact been paid out on these illegitimate policies and the total value of the fund. Where is the transparency? Why OSTI would allow it considering there was no license in place is suspect. Should all policies not be deemed invalid and premiums paid back? This process is flawed and *******, meant to benefit Constantia and Prime Meridian who are still advertising. There is no warning to consumers with beware of these *****s. Mass action seems to be the only language OSTI and ******* companies will understand.