Your broker could be made to pay up for rejected claim if you weren't properly advised

Consumer ninja Wendy Knowler takes a deep dive into a recent ruling in favour of the client by the FAIS Ombud.

We usually see the role of an insurance broker as someone who sells us a policy, and possibly we never see or hear from them again.

Consumer ninja Wendy Knowler describes a broker as someone who is the intermediary between you as the policy holder, and the insurer.

And their role extends far beyond the sale, she stresses.

Knowler quotes from a recent ruling by the FAIS ombud  (Financial Advisory and Intermediary Services), where he said that brokers are expected to do a lot more than be “a mere conduit or postbox” for their clients’ transactions with insurers.

If brokers don't fulfill their duties and responsibilities, they could be made to pay for any losses suffered by a client as a direct result of their failure to do so.

This is exactly what happened when the Ombud ruled in favour of a client who had her claim for a stolen vehicle rejected, and then filed a complaint against her broker.

Five years ago Dr Luzanne de Beer’s R311,000 insurance claim for her stolen Land Cruiser was rejected by Quicksure - underwritten by Old Mutual - on the grounds that she’d failed to have a specific tracking device installed.

Dr de Beer first lodged a complaint with the Ombudsman for Short-Term Insurance, who sided with the insurer.

She followed up with a complaint with the FAIS Ombud, saying the broker didn’t tell her that installing a high-tech tracking system in her Land Cruiser was a condition of the cover with Quicksure.

The Ombud ruled that the broker - Badie Jacobs Insurance Brokers - was responsible for her loss and the company's been ordered to pay her R301,466 - the claim amount minus an R11,000 excess payment.

"As an expert in the field, the broker was expected to provide all the information and assistance necessary to ensure that De Beer was well advised and informed regarding a special condition such as an early warning satellite tracking device, Simpson said."

Wendy Knowler, Consumer Journalist

A broker would also be expected to follow up regularly to check whether the device was installed and to send proof of the installation to the insurer.

The Ombud said that sending a general letter to its clients and the policy schedule to the complainant, does not satisfy the requirements in terms of the code.

"Had Badie Jacobs Insurance Brokers complied with its duties, there was a high probability that De Beer would have installed the device and her claim would have been successful, the Ombud said."

"Hence the broker now has to fork out that R301,466, plus interest at a rate of 11.75% per annum from the date of the determination to the date of final payment."

Wendy Knowler, Consumer Journalist

Knowler's advice: Don’t trust that your broker is telling you everything you need to know. Check policy wordings and exclusions.

If you believe you've been financially prejudiced because of financial service rendered to you in respect of a regulated financial product, visit the FAIS Ombud’s complaints portal and select 'lodge complaint'.

For more detail, listen to the interview clip at the top of the article