Brokerage ordered to pay client R300k+ after insurer rejects claim

A Brits-based insurance brokerage has been ordered to pay a medical doctor more than R300 000 after her short-term insurer rejected her claim following the theft of her Toyota Land Cruiser.

Her claim was rejected because a satellite early warning device was not installed in the vehicle as required by the policy.

Read: Fais Ombud recovers R39m for consumers in one year

The Ombud for Financial Services Providers (Fais) Advocate John Simpson ordered Badie Jacobs Insurance Brokers CC to pay Dr Luzanne de Beer R301 466.00, plus interest, related to her previously rejected insurance claim.

De Beer purchased the Toyota Land Cruiser 76 4.2D on 5 February 2016 and added the vehicle to her insurance policy through her broker, Badie Jacobs Insurance Brokers.

The vehicle was stolen from her place of employment on 20 July 2018 and she submitted a claim of R312 400 to her insurer Quicksure, which is underwritten by Old Mutual Insure.

Quicksure rejected the claim on 17 August 2018.

De Beer lodged a complaint against Quicksure with the Ombudsman for Short-Term Insurance (Osti) but the complaint was dismissed.

She then filed a complaint on 29 October 2018 with the Fais Office against Badie Jacobs Insurance Brokers, claiming that Jacques Jacobs, a representative of the insurance broker, did not properly inform her of the requirements of the policy, including the need for this device to be installed.

De Beer further claimed there was no correspondence from her insurance brokers inquiring whether she had a satellite early warning device installed and they also never requested the installation certificate from her.

Broker responds

Badie Jacobs Insurance Brokers said De Beer signed the policy documents after it was explained to her that a satellite early warning device had to be fitted and did not give the contract and accompanying disclosure the attention they deserved.

It said the policy stipulates the requirement regarding the satellite device, which is the grounds on which the claim was rejected.

It further claimed the satellite device was explained to De Beer, which was corroborated by the correspondence of Suzaan Calitz, one of its employees.

Advocate Simpson said the insurance brokerage from the onset denied liability and claimed De Beer was aware or ought to have been aware of the satellite early warning device.

He said a recommendation was sent to the brokerage on 24 August 2023 advising them to settle the claim but they responded on 7 September 2023 that they intended to appeal the decision and were seeking legal advice on the matter.

Advocate Simpson said subsequent attempts to contact the brokerage or its compliance officer telephonically and by email were unsuccessful.

Tracking device ‘not a usual requirement’

Assessing the evidence, Simpson said based on the Office of the Fais Ombud’s experience with cases it adjudicates, an early warning satellite tracking device is not a normal or usual requirement in a policy for theft cover on all vehicles.

It is generally only applicable to certain vehicles depending on value and exceptional risk factors, he said.

Simpson said the insurance brokerage claimed it discussed the requirement with De Beer but it had not produced any evidence in this regard.

He said there is no record of advice reflecting any discussion with De Beer regarding the satellite tracking device and also no evidence of them following up with her to confirm whether a device was installed.

Simpson said the only evidence they submitted was a general letter sent to all clients and the policy schedule that was sent to De Beer at the inception of the policy.

He added that the general statement made by Ms Calitz had little probative value and did not advance the insurance broker’s case.

‘No proof’

It also did not provide any proof that De Beer was properly advised and informed or that the brokerage complied with its responsibilities in terms of the general code of conduct for authorised financial services providers, he said.

Advocate Simpson said on a balance of probabilities, it can only be concluded that the insurance broker did not provide any additional specific explanation or information to De Beer regarding the early warning satellite tracking device besides what was contained in the policy schedule.


He stressed the code places a duty on financial services providers to disclose any material terms of the contract and places an obligation on them to place the client in a position to make an informed decision and take the appropriate action where necessary.


Advocate Simpson said the brokerage seeks to blame De Beer for not reading the policy.

“However, it has not provided any evidence of complying with the code.

“There is no evidence of it rendering services with due skill, care, and diligence,” he said.

The brokerage appears to regard itself “as a mere conduit or post-box” for De Beer’s transaction with the insurer.

“As per the code, its duties and responsibilities extend far beyond that.”

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

“It will then be reasonably expected to follow up regularly to check whether the device was installed and to send proof of the installation to the insurer.

“Sending a general letter to all its clients and the policy schedule to the complainant [De Beer] does not satisfy the requirements in terms of the code,” he said.

Simpson said the failure of the brokerage to comply with the code led to a situation where De Beer was not reasonably aware of the requirement and did not take the necessary steps to comply with it.

Another ombud ruling

In another determination, Advocate Simpson ordered Uncle Mikes 24 Funeral Services (Pty) Ltd, trading as Nattex Funeral Services in Kimberley, to pay Lee-Ann Robinson the R40 000 cover benefit provided in terms of her funeral policy with the firm.

Her claim in April 2020 related to the passing of Robinson’s cousin Teshwill Eksteen, one of the insured individuals on the policy.

Winston Williams of Nattex Funeral Services denied the claim based on Eksteen passing away within the waiting period of six months.

However, it was found that the policy was seven months old when the claim was submitted.

Robinson requested Nattex Funeral Services to honour the claim and pay her the R40 000.

Nattex Funeral Services agreed to pay the R40 000 claim in instalments starting from August 2020. However, no evidence of payment was provided, and it was granted an extensive period to settle the claim.

Simpson said attempts to contact Nattex Funeral Services were unsuccessful.

After assessing the evidence and upholding the complaint, Simpson concluded that Nattex Funeral Services was in contravention of Section 2 of the Fais Act, which states: “A provider must at all times render financial services honestly, fairly, with due skill, care and diligence, and in the interests of clients and the integrity of the financial services industry.”

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