Ruling a ‘game-changer’ for insurance underwriting
KGA Life Limited, a funeral insurance underwriter specialising in group schemes, has lost yet another Western Cape High Court case involving a financial services provider.
The Daily Maverick reports that the development has repercussions for underwriters and funeral policyholders across the country.
KGA Life has previously lost legal disputes with intermediaries.
The latest action was instituted last year against the Stellenbosch underwriter by Multisure – which offers funeral insurance cover and legal assistance to low-income earners – because KGA Life had refused to release it from its contract and delayed payments to claimants, despite undertakings to the Financial Sector Conduct Authority (FSCA).
Multisure claimed KGA had flouted the FSCA’s ‘treating customers fairly’ principles and Policyholder Protection Rules (PPRs) of the Long-Term Insurance Act.
In June 2021, Multisure informed KGA Life it wanted to cancel its contract (to move to rival underwriter, AUL), but KGA blocked it by informing Multisure that it needed signed consent from each of its more than 9 000 individual clients, most of whom are pensioners.
KGA never informed Multisure about changes to the PPRs, introduced in September 2018, and continued accepting group scheme premiums and new group business from Multisure since October 2018.
Article disclaimer: While we have made every effort to ensure the accuracy of this article, it is not intended to provide final legal advice as facts and situations will differ from case to case, and therefore specific legal advice should be sought with a lawyer.
