The Financial Sector Conduct Authority (FSCA) is investigating an incident involving Old Mutual Assurance Company (OMAC) following a delay in paying out a funeral plan.
The Mitshali family in Kwa-Zulu Natal made the claim on 11 November 2019 but it was referred for further assessment and then paid on 15 November, instead of being made within the contracted 48 hours, Old Mutual Assurance Company said.
The family even recurred to bringing the body of their loved one to an OMAC branch to prompt the insurer in making the payment, the FSCA said.
“We are interrogating the facts in this matter, and once we have concluded our assessment, we will take appropriate action where necessary,” the regulator added.
“As the conduct authority for the financial sector, we exist to ensure that financial customers are treated fairly by financial institutions.
“While we do not resolve individual complaints, we do hold accountable any licensed entity that does not treat its customers fairly.”
‘Deeply sorry’
The South African insurer was forced to apologise as a result.
Clarence Nethengwe, managing director of Old Mutual Mass and Foundation Cluster, said: “Although most claims are paid on time, and delays are rare, it is clear that we need to make our additional claims assessment processes easier and faster to ensure we do not let any of our customers down in their time of greatest need.
“While more than 99% of our valid funeral claims are paid out within the contracted 48 hours, we must strive to make that 100%.
“Although every attempt was made to settle the claim as speedily as possible, we are deeply sorry for the delay. We are committed to doing better and we will be taking steps to accelerate and improve the way we verify those claims that need to be assessed further.
“Old Mutual will also continue to engage the family and provide any necessary support.”
Cancellation threat
The incident sparked a social media call for all Old Mutual clients to cancel their policies with the company.
The FSCA, however, advised against the action: “Although we understand the frustration felt by many, we urge customers not to cancel their policies, as there are risks involved with such an action, such as:
- A customer who cancels their life policy may find it very difficult if not impossible to find new cover if they had developed medical conditions along the course of their policy.
- A life policy taken out when you are younger is usually a lot cheaper than a policy taken out when you are older, and a new policy taken out by an older person may not just have higher premiums but it may be difficult to get the same cover and limits they had before.
- Early termination of an investment policy could attract charges, and these could also be payable on entering an alternative investment.
- There may be waiting periods attached to the new funeral cover a client receives.
“If a customer does decide to replace their policy, it is essential to first obtain a detailed comparison of the features and costs of the old and new policies, preferably with the help of a qualified financial adviser,” the South African watchdog added.
Following the managed separation of the group in 2018, Old Mutual South Africa is no longer connected with Quilter or Isle of Man-based Old Mutual International.
