Richard Spoor Attorneys has launched an application at the Financial Services Tribunal to review the Prudential Authority’s decision to allow Constantia Insurance to cancel more than 5 000 life policies after it converted its licence from a short-term to a non-life insurer due to changes in legislation.

A BusinessLIVE report says the legal firm is representing eight policyholders whose life policies were cancelled by Constantia Insurance.

The firm also has a power of attorney mandate to represent an additional 102 policyholders who had life policies with Constantia Insurance that were cancelled.

‘Constantia have admitted that the policies were loss-making; however, this is not a justifiable reason to cancel life policies, seemingly under the guise of complying with a new legislative dispensation,’ said Sonam Mansingh, an associate attorney at Richard Spoor Inc.

According to the law firm, Constantia Insurance began notifying 5 427 policyholders in early 2020 that it would be cancelling their Prime Living Cover Grow and Living Legacy policies that were previously registered under the Short-Term Insurance Act.

The reason for the cancellation was that Constantia Insurance was converting its licence to a non-life insurer in terms of the new Insurance Act of 2017, meaning it would no longer be able to continue providing life policies.

Mansingh says Constantia allegedly assured the policyholders not to be concerned as they would be contacted to discuss an alternative insurance solution.

However, the end-result was that they were offered policies that did not provide the same level of cover they had under the original policies.

Those that did not want the alternative policies were also unable to secure comparative life cover from other insurer due to their age and health.

Full BusinessLIVE report