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Bid to appeal insurance ruling rejected
2009/03/07 12:00:00 AM
Charles Pillai, the Ombud for Financial Services Providers, this week refused an insurer and a broker leave to appeal against a ruling that ordered them to make good the loss a driver suffered when she wrote off her car while speeding.
Renasa Insurance and Action Plan Management (the broker) argued that the case should have been heard by a court of law and not by the ombud.
Action Plan Management challenged the R109 345 plus interest that was awarded to Melishree Maduray of Phoenix, and both the broker and Renasa Insurance alleged that Pillai had failed to adhere to the procedures followed by a court of law.
After Maduray had written off her car in July 2006, Renasa Insurance declined to pay her claim on the basis of a "good citizen warranty", which stated that a claim would be repudiated if she broke the law or traffic regulations while driving.
In his ruling, Pillai found no evidence that Action Plan Management had pointed out this material clause to Maduray when selling car insurance to her or that Maduray had been sent a copy of her policy.
Pillai also ruled that the "good citizen warranty" clause was unacceptable because it was "unconscionable, oppressive and unreasonable".
He said "it would be virtually impossible to find a driver who has not at some or other time inadvertently, if not deliberately, contravened one or other road traffic law or regulation".
Renasa Insurance also disputed Pillai's jurisdiction over the matter, because the ombudsman for short-term insurance had already ruled in its favour.
Dismissing the application for leave to appeal this week, Pillai says the Financial Advisory and Intermediary Services (FAIS) Act allows him to consider and dispose of complaints in a "procedurally fair, informal, economical and expeditious manner, and by reference to what is equitable in all the circumstances".
He says the insurer and broker were misguided, and had confused the procedure in a court of law with the ombud's complaints-resolution mechanism.
"Complaints are made more often than not by laypersons who cannot be expected to, and are not required by the FAIS Act to, formulate complaints with the precision required in court cases, and disputes are resolved by reference to what is equitable," he says.
Pillai says the office of the short-term insurance ombud dealt with the matter under its terms of reference, whereas he dealt with the case in terms of his mandate under the FAIS Act.
Source:Personal Finance
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