Most customers do not realise the importance of providing all required information to insurers at the onset of signing up for cover. What they don’t realise is that dishonesty and fraud result in significant costs to the industry which will ultimately be borne by other customers through higher premiums.
Henk Meintjes, Head of Risk Products from Liberty says, “Non-disclosure occurs when the medical, financial, lifestyle or occupational questions are answered incorrectly or where important information is omitted when cover is first bought. This ranges from deliberate fraud to innocent omissions where certain information is simply forgotten.”
He says that it is important to help reduce the issue of non-disclosure.
The issue of non-disclosure is not limited to the South African insurance industry. It’s a global problem that must be addressed by educating customers. In some cases non-disclosure is an attempt by the customer to get better terms. Unfortunately, non-disclosure can have serious consequences on the customer, their dependants, the insurer and other policyholders, adds John Maxwell, Liberty Chief Executive: Individual Arrangements.
According to Liberty’s claim statistics for 2016, the insurer paid all valid claims to the value of R4.3 billion. That’s an average of 63 claims, one every 8 minutes, totalling R17 185 524 every working day.
“While Liberty always pays valid claims, there are some instances where non-disclosure could invalidate the policy and the claim even if the claim criteria are met.”
Where there was a condition or ailment which was present when the benefit was underwritten but the customer failed to inform us, we may reconstruct the policy at claim stage with that information. Assuming the information would have been relevant to the underwriting of the case at that time, the cover may be declined or offered on different terms such as medical loadings, exclusions or limits on the sum assured, explains Meintjes.
Withholding important information is not worth it, he warns. With insurance, you’re trying to mitigate risks, but with non-disclosure, you’re adding another level of risk. It’s simply not worth trying to save a few rand by being dishonest and putting your entire policy at risk.
“The reality is that non-disclosure doesn’t just have a negative impact on the insurer, the validation of the policy may in itself be traumatic for the customer during this difficult time. It can also be disastrous for the beneficiaries who will be left to carry the very financial burden the policy was meant to insure against if the claim is invalidated. Insurers also have a duty to other policy holders to ensure their premiums are not inflated by the cost of paying for pre-existing conditions. For all these reasons, customers should do their best to disclose as much as possible at application or when speaking to their Financial Adviser to have certainty of cover,” says Maxwell.