GENERAL CLAIMS WORKFLOW
The life insurance company needs to be notified of a claim by the intermediary, claimant, beneficiary or policyholder. Some companies may have an automated process whereby the notification and registration process form part of the same step and at the same time a letter is sent to the client automatically requesting standard requirements. A timeframe may be specified within which the notification must occur.
The Insurance Company acknowledges receipt of the notification and where required, sends the client a notice of outstanding requirements.
The claims assessor evaluates the claim against relevant definitions and/or policy terms and conditions. The assessor decides on relevant actions to be taken, for example, additional requirements or forensic involvement.
Depending on the policy terms and conditions, in general the claimant and/or beneficiary (if different to life assured) is responsible to provide all claim forms, standard requirements as well as all substantive medical evidence to support the reason for the claim.
The claimant and/or beneficiary is always liable for all medical expenses to support their claim. However, in the event where the insurance company disagrees with the evidence provided, they reserve the right to obtain independent medical evidence, in which case the insurance company will be liable for any such expenses.
Where a claimant or beneficiary has provided evidence, but it is not in support of the claim the insurance company can make a business decision to pay for any medical expenses where they believe there is a good possibility that the claim could be valid.
Finalisation / validation
Once all information has been collated and all relevant parties have been involved in the assessment process, the assessor decides on the validity of the claim as well as benefit payment to the nominated beneficiary in line with the overall decision.
Repudiation of claim
Should the claim be declined a repudiation letter will be sent to the client explaining reasoning behind the decision, for example, declined due to non-disclosure or not meeting the criteria in the event of dread disease claims.
Non-Disclosure / Misrepresentation at Claims Stage
An insurer ordinarily relies on statements made in the policy application. If such statements are false, they may result in the insurer issuing a policy that would otherwise not have been issued. Upon learning the truth, the insurer may have the right to repudiate (void) the policy on the ground that no valid contract ever existed.
See Underwriting for more information.
Onus of proof
The Long-term Insurance Ombudsman refers to the four corners of a claim – contract, identity, event and discharge or claim form. The onus is on the claimant to produce these. The onus to obtain additional evidence to further investigate a claim is the insurer’s responsibility.
At any stage, where the insurer disagrees with the merits of any claim, onus of proof remains solely with the insurer to validate their disagreement. This can vary from normal investment type policies to disability type benefits. The insurer must prove why they disagree with what the claimant claims they are entitled to. Sometimes this is easy to prove as it may be a policy condition that is easily defendable. At other times it may be a medical condition that is subjective and warrants special investigation and it may be that medical professionals disagree on the severity of certain conditions.
Where a claim has been declined, the insurer may agree to review after a certain time period, especially when trying to establish permanency of a condition.
In the event of the death of the life assured, a beneficiary will be defined as the person(s) entitled to receive either ownership or proceeds of a life cover policy. The beneficiary(s) shall have no rights in or to the policy until written notice of the death of the insured has been received.
Where a beneficiary dies before or at the same time as the policyholder, the benefits of that policy accrue to the policyholder’s estate. Where benefits are payable to a nominated beneficiary as a result of the policyholders’ death and the beneficiary dies before the payment is made, then payment is made to the beneficiary’s estate. Where more than one beneficiary is nominated and only one beneficiary dies before or at the same time as the policyholder, one needs to analyse the contract and the relevant clauses that form part of the beneficiary nomination form. In most cases the relevant portion will be accrued to the deceased beneficiary’s estate.
If the beneficiary nomination is in respect of a retirement annuity contract, the benefits will be paid in terms of Section 37C of The Pension Funds Act and/or the rules of the fund and it may be possible that the nominated beneficiary who is not a financial dependent does not receive any proceeds of the policy.
An important factor to consider regarding beneficiary nominations is whether there is any other supporting or contradictory documentation that can influence the validity of the beneficiary nomination. For example, but not limited to:
Letters from an executor stating that there is a dispute that needs to be resolved before payment occurs.
Claims of fraudulent transactions/beneficiary nominations.
Divorce agreements/court orders that would contradict the validity of such nominations.
Minors and/or handicapped beneficiaries
Where beneficiaries are minors, payment can be made to the legal guardian of the minor, or into a trust account to be held for and on behalf of the minor or to the Guardian’s Fund. To be able to make payment to a trust account there needs to be a trustee and/or curator in place.
Unpaid claims and interest payment
A reasonable period for the payment of the claims depends on the nature of the claim as some claims can be finalised within a week while other more complicated claims can take months.
Currently a maximum period of 60 days applies for death claims and 120 days for disability claims before interest will become payable to beneficiaries.
Interest is therefore calculated for the period from the date all requirements were received to the date the payment was made.
The Ombudsman for Long-Term Insurance
The office for the Ombudsman for Long-term insurance was established in 1985. The function of the office is to mediate in disputes between insurers and policy holders.
Contact details: Website: http://www.ombud.co.za
Postal Address: Private Bag X45, Claremont, Cape Town, 7735
Tel No: (021) 657-5000
Fax No: (021) 674-0951