Customer protection and insurance contracts
Customers can often feel overwhelmed, misled, or taken advantage of when dealing with insurance companies. That is why it is important for holders of insurance policies to know their rights. How does customer protection in the general law affect insurance contracts? What customer protections are generally included in insurance policies to supplement this? Read further for a brief summary of the role of Policyholder Protection Rules and insurance law in protecting the rights of customers.
General law
Insurance contracts are regulated under the Insurance Act (as well as the Short Term Insurance Act and the Long Term Insurance Act. Other areas of law and legislation may be applicable depending on the type of policy and agreement made.
The non-life Policyholder Protection Rules are applicable to non-life insurance policies.
The life Policyholder Protection Rules apply to all life insurance policies. The rules include comprehensive requirements regarding the content (mandatory and impermissible provisions), language, notification and disclosure requirements for the applicable insurance policies.
The Policyholder Protection Rules provide substantial protection to policyholders, including:
- General provisions regarding the fair treatment of policyholders.
- Product design and standards, including the following:
- cooling-off rights;
- prohibition of negative option selections;
- determining premiums and excesses;
- void provisions;
- waiver of rights; and
- the signing of blank forms by intermediaries.
- Advertising and disclosure requirements for insurers, including the following:
- protecting the public interest;
- identifying the insurer;
- appropriate language and medium;
- record keeping;
- prohibition of negative option marketing;
- direct advertising;
- comparative marketing; and
- loyalty benefits and bonuses.
- Intermediary and distribution, including the following:
- intermediary agreements;
- requests for information; and
- payment of remuneration to intermediaries.
- Product performance and acceptable service, including the following:
- data management;
- ongoing review of product performance;
- grace periods; and
- record keeping.
- Unreasonable post-sale barriers, including the following:
- claims management;
- complaints management; and
- termination of policies.
Insurance policies
The protections afforded to policyholders by the Policyholder Protection Rules may to an extent be incorporated into policies. Insurers may incorporate more favourable terms in line with their own Treating Customer Fairly culture as long as they are not more restrictive than the basic rules. Where there is doubt a contract will be interpreted in favour of the consumer.
Need advice on your insurance matter?
If you need assistance with an insurance matter, where a claim has been denied, rejected or repudiated feel free to contact us at Paul du Plessis Attorneys on 012 809 1588 or send an e-mail to paul@pauldup.co.za