Over 70 get life policies back

High Court finds Constantia Insurance Company Limited had no legal basis for the cancellation

IT WAS a bitter-sweet victory for a group of more than 70 people who previously abruptly had their life insurance policies cancelled, when the High Court ruled in their favour last week.

Judge Bashier Vally ruled that the cancellation of their policies by insurance company Constantia was unlawful and illegal.

But while the judgment was welcomed, one policy holder died not knowing whether his children would receive the insurance payout.

Francois Marais died at his home in Bloemfontein on Saturday, a day after the ruling.

The 65-year-old paid premiums for five years until his policy was cancelled by his insurer unilaterally, three months ago.

Marais died of cancer.

Marais’ sister, Amorien Veitch-crawford, who lives in Honeydew, Gauteng, said Marais died before she could share the exciting news with him.

She said he had been concerned his family would not benefit from the policy he had invested in for many years.

“I wonder who to trust, perhaps it is better to keep the money under the mattress to avoid stress in the event of death,” said Veitch-crawford.

The class action brought on by Hermione Nell and 73 others stemmed from Constantia Insurance Company Limited notifying the group via SMS on February 26 that their policies covering illness, death and accidents were to be cancelled with effect from the end of March.

Vally said Constantia had no legal basis for the cancellation.

He ordered Constantia to notify all policyholders, about 5 270, that they may lodge claims for insured events since the date of the “purported cancellation” and it should also give them 30 days from the date of the order to pay premiums since March, should they wish to remain insured by those policies.

Vally said the policies were “expressly and aggressively” marketed as providing “cover for life”, but when they were sold over the phone, no mention of the small print in the contract that was sent to policyholders later.

The small print said: “The insurer may cancel this policy on 30 days’ written notice.”

“By being told they would be insured ‘for life’ they were lulled into a false sense of security.

“There was no reason for them to anticipate that Constantia would at a whim cancel the policy and just give them 30 days written notice, thus placing them at peril,” said Vally.

He also ordered that Constantia pay the costs of the application including the costs of the two counsel.

“The Prime Living Cover Grow and Prime Living Legacy insurance policies held by the 74 applicants are declared to be extant,” said Vally.

Constantia told policyholders that, in terms of the new Insurance Act, insurers may no longer conduct life and non-life insurance under the same licence because the Prime Covergrow policy option only meets the definition of a “life cover policy” as defined in the Insurance Act while Constantia Insurance Company Limited was licensed as a non-life insurer.

Policyholder Eddie Naidu of Puntans Hill, Durban, said it was a landmark victory .

“It is refreshing that we still have our policies. Constantia did not see this coming. But we fought gallantly with limited resources,” said Naidu.

Iona Feitze from Kloof said she was concerned because the insurer had not contacted them after the ruling. She said many policyholders were still in the dark when they were supposed to be celebrating their court victory.

“It is still a roller-coaster for us;, the past three months have been a struggle but we appreciate the excellent work from the legal team,” said Fietze.

Constantia legal department manager James Aveyard said he could not comment because the legal team was still reviewing the judgment.