NFO recovers R140 million for life insurance claimants

The National Financial Ombud (NFO) has announced that from January 2025 to date, its Life Insurance Division has recovered a total of R140,688,800 (R140.6 million) in respect of claims, including declined claims that were reversed, as well as compensation awarded for poor service.

The NFO says that since the beginning of the year, the division has helped unlock millions of rands in claim reversals and service-related compensation, funds that were previously out of reach for grieving families and vulnerable policyholders.

It says these victories, however, are not merely financial. They represent a deeper commitment to fairness, accountability, and restoring dignity to South Africans navigating the complexities of the insurance sector.

The (NFO) describes itself as a single, one-stop dispute resolution service, comprising four former longstanding industry ombud schemes: the Ombudsman for Short-Term Insurance, the Ombudsman for Long-Term Insurance, the Credit Ombud, and the Ombudsman for Banking Services. All services are provided free of charge.

Denise Gabriels, lead ombud of the Life Insurance Division of the NFO says: “Every day, South Africans face a barrage of troubling headlines, violence, corruption, despair. These stories weigh heavily on our national spirit. At the NFO, we don’t ignore these realities. But we also believe in shining a light on something else: stories of fairness reclaimed, dignity restored, and hope renewed.

“Our mission is to resolve financial services complaints fairly, impartially, and efficiently. We operate independently and without fear or favour, always guided by our values of excellence, integrity, passion, and vision.

Gabriel says: “Sometimes our interventions mean that claims once declined are paid in full, delivering life-changing outcomes for families. These stories seldom make front-page news, but they are the ones that allow people to breathe easier, free from the weight of financial hardship.

“Since the beginning of this year, our interventions have resulted in millions of rands being paid back to complainants, alongside additional compensation in cases of poor service. Beyond the numbers, these outcomes carry profound personal impact.”

Gabriels cited a recent final ruling that ordered Metropolitan Life to pay a funeral claim of R20 000, which was initially declined because the deceased did not qualify as a parent under the policy.

The case centred on a misrepresentation by a Metropolitan financial advisor, who had knowingly listed the deceased, described by the policyholder as her godfather and mother’s ex-partner, as her "father" during the policy application. The insurer argued that the insured did not meet the definition of a parent in the policy contract and that the policyholder should have verified this upon receiving the documents.

The matter was considered in a meeting of adjudicators chaired by the lead ombud. The adjudicators ruled that the advisor’s conduct created a legitimate expectation that the cover was provided. The panel held that insurers are bound by what is communicated at the application stage when incorrect information is given by their own representatives. Citing long-standing legal principles, the ruling stated that a party cannot benefit from its own error at the expense of another. As such, the original R20 000 claim, where the waiting period had expired, was upheld. Metropolitan accepted the decision and paid the benefit in full.

Gabriels says insurers are bound by representations made by their agents during the application process. Policyholders have a reasonable expectation that the terms of a policy reflect what they were told at inception. Misrepresentation by a financial advisor can render the insurer liable, regardless of what the written contract may say.

“An insurer cannot escape liability by pointing to a policyholder’s oversight if the policy was issued based on incorrect information provided by its own representative. This ruling serves as a critical reminder to insurers of their obligations in ensuring transparent and accurate policy information and reinforces the protection of policyholders.

“On the other hand, consumers must answer questions at application stage fully and honestly. Always request and keep a copy of your policy document and read the terms and conditions carefully. Keep your beneficiary nominations up to date," she says.

Gabriels says if you have a dispute with your insurer that remains unresolved after their final response, you may escalate the matter to the NFO for free, independent assistance.

PERSONAL FINANCE