Press Releases

    Tips for the youth to consider when taking out a short-term/non-life insurance policy


    In today’s world, young people own some of the most expensive products on the market such as cell phones, cameras, and motor vehicles. In recognition of Youth Month, the Ombudsman for Short-Term Insurance (OSTI) has put together a few insurance tips.


    1. Insure your valuables

    Young people sometimes underestimate the importance of having insurance. The assumption is that nothing will go wrong. The importance of insurance is often only realised when a loss or damage is suffered.


    Considering the unpredictability of life events, having the right insurance cover is a significant investment. Short-term/non-life insurance will provide you with financial security against unforeseen damage to or loss of your valuables.


    1. Provide accurate information

    The insurer will ask you a number of questions during the underwriting/sale of the policy. This is done to assess and price your risk. You must answer these questions truthfully. If you fail to do so, the insurer may not only reject a claim but also cancel the policy with effect from the start date. If an insurer cancels your policy, you may find it difficult to obtain other insurance cover.


    OSTI sees far too many complaints where young policyholders who have taken out motor vehicle insurance misrepresented the ‘regular driver’. The regular driver is the person who will drive a motor vehicle most often during the period of cover. Drivers between the ages of 18 and 25 sometimes tell an insurer that their parents will be the regular driver so that they can be quoted a cheaper premium.


    Insurers conduct detailed investigations when validating a claim. At this stage, such a misrepresentation will invariably be revealed, and the claim may be rejected on the basis of a material misrepresentation.


    1. Evaluate your personal needs and financial standing

    Before buying insurance, carefully consider your needs, what the insurance product covers, and how much it will cost you.


    Choosing the best cover does not necessarily mean finding a policy with the cheapest premium. A cheaper premium may mean fewer benefits and higher excesses. Get insurance that is tailor-made to meet your needs and budget. You must also consistently manage your income and expenses to ensure that the premium is paid on time to prevent the policy from lapsing. This is particularly important as you are still building your insurance risk profile.


    Remember that your insurance needs will change as your life and career develop. You should therefore review your insurance policies regularly.




    1. Premium reversals

    You will not have cover if you reverse an insurance premium after it was successfully collected from your bank account by the insurer. Reversing a premium can even result in the immediate cancellation of the policy. Contact your insurer to see if any arrangements can be made when experiencing financial difficulties.


    1. Read the policy documents

    The insurer does not have an open-ended liability to compensate you for any loss or damage suffered. It is only liable if the claim falls within the scope of the cover provided in the policy documents. Read and understand the policy terms and conditions.


    Be mindful of circumstances that may result in an insurer refusing to pay out on a claim, for example driving whilst under the influence of alcohol or without a valid driver’s licence, not adhering to the time periods in the policy, not meeting vehicle or home security requirements, and dishonesty.


    1. Be overly inquisitive about your cover

    Ask your insurer or broker to explain the exclusions of the cover and any obligations you may have under the policy. This will save you the stress and frustration of becoming aware of these only after you have suffered a loss.


    For more insurance tips, follow the OSTI social media pages.

    Facebook: The Insurance Ombudsman

    Twitter: Insurance Ombudsman South Africa

    LinkedIn Insurance Ombudsman




    About the Ombudsman for Short-Term Insurance

    The Office of the Ombudsman for Short-Term Insurance (OSTI) is an independent, non-profit industry ombud scheme. Short-term/non-life insurance includes motor, house owners’ (buildings), householders (contents), cell phone, travel, disability and credit protection insurance, and commercial insurance for small businesses and sole proprietors. OSTI’s mandate is to provide the insuring public and the short-term/non-life insurance industry with a free, efficient, and fair dispute resolution mechanism through an alternative dispute resolution process, applying the law and principles of fairness and equity. OSTI is not a court of law. It examines the information and evidence placed before it by the parties to a dispute and makes recommendations that are guided by the legal position and principles of fairness and equity. In rare instances where required, OSTI may make rulings. It does not, nor is it empowered to, procure evidence or witnesses, or investigate a complaint. OSTI, it must be stressed, operates independently of both the Financial Sector Conduct Authority and the Prudential Authority in its adjudication and dispute resolution process.



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    OSTI urges the public to be entirely truthful with insurance companies


    JOHANNESBURG – The Ombudsman for Short-Term Insurance (OSTI) would like to remind consumers not to withhold or misrepresent information when taking out short-term/non-life insurance or when they claim from insurance companies. OSTI points out that non-disclosure or misrepresentation of material facts can lead to a claim being declined or a policy being cancelled or both. A consumer whose policy gets cancelled due to non-disclosure or misrepresentation may struggle to find alternative insurance cover as he/she may either be blacklisted or be considered an undesirable risk.


    OSTI recognises that financial hardships may lead to consumers withholding or misrepresenting information. However, OSTI cautions against doing so because the rejection of a claim or cancellation of a policy by an insurer may lead to further financial strain.


    When taking out a policy, consumers sometimes misrepresent the details of the regular driver, their insurance history, security requirements, criminal records or the use of their vehicles. The non-disclosure or misrepresentation of this information causes insurers to insure a consumer they would not have insured had they been correctly informed or to charge the incorrect premium.


    When a claim is lodged, consumers sometimes provide incorrect or inconsistent versions of the events leading up to or during an incident, inflate their claims or refuse to give their insurers access to information that could affect the outcome of the claim, such as information about their whereabouts or alcohol consumption. Insurers may end up not being able to validate the claim and declining the claim or using other means to get the information.


    Consumers often consider it unfair that insurers only validate their information at claims stage. However, it must be remembered that insurance policies are contracts entered into on the basis of good faith. It is the consumer’s duty to provide complete and accurate information which insurers then rely on to underwrite the cover.


    Furthermore, consumers should not underestimate the role of independent witnesses, expert evidence, vehicle tracking data, bank statements, cell phone records, medical records, police reports and call recordings, all of which insurers can rely on to validate a claim.


    OSTI case study dealing with misrepresentation at sales stage


    A policyholder mentioned, during the sale’s conversation, that his son would be the regular driver of the insured motor vehicle and that the vehicle would occasionally be used for business purposes. However, later in the conversation, the policyholder noted himself as the regular driver and insured the vehicle for private use. The consultant informed the policyholder that his son must not drive the vehicle more than him because the policyholder had noted himself as the regular driver.


    The insured vehicle was damaged in a motor vehicle accident whilst being driven by the policyholder’s son. The policyholder reported the accident to the insurer and submitted a claim.


    During the investigation of the claim, the policyholder and his son informed the insurer’s appointed assessor that the policyholder’s son had been the regular driver of the insured vehicle since the policy started and that he had used the vehicle for business purposes. The assessor also interviewed a colleague of the policyholder’s son. The colleague confirmed that the policyholder’s son drove the vehicle and used it for business daily.


    The insurer advised that it would not have accepted the risk had the correct facts been disclosed to it. The insurer therefore cancelled the policy from when it started and rejected the claim.


    The policyholder disagreed with the insurer’s decision and argued that the insurer was aware that his son was also going to drive the vehicle for business. He also advised that a previous claim had been reported to the insurer where his son was the incident driver, and no issue was raised by the insurer regarding the regular driver.


    The insurer, however, pointed out that the previous claim was not validated nor settled as the cost of repairs fell within the excess payable by the insured. The insurer also acknowledged that it had been informed that the policyholder’s son would drive the vehicle for business, however, the policyholder had indicated that this would only be occasionally, and that he would be the person driving the vehicle more often than any other person.


    OSTI listened to the recorded underwriting and assessment conversations provided by the insurer and found that material facts relating to the regular driver of the vehicle were misrepresented. Moreover, the insurer’s decision to reject the claim and cancel the policy was based on information provided by the policyholder and his son to the insurer during the validation of the claim. Based on the above, OSTI concluded that the insurer was within its rights to cancel the policy and reject the claim.


    A policyholder must fully disclose all matters relevant to the insurer's assessment of the risk when requesting insurance cover or updating the cover. This is founded on the insurer’s right to be informed of all the material facts to enable it to properly assess the risk. Most policies contain an obligation on the insured to provide true and complete information.


    In terms of Section 53(1) of the Short-term Insurance Act 58 of 1998, insurers are prohibited from avoiding contracts of insurance unless the policyholder is found to have misrepresented information which was “likely to have materially affected the assessment of the risk under the policy concerned at the time of its issue or at the time of any renewal or variation thereof”.





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    "The Ombudsman for Long-term (life) Insurance and the Ombudsman for Short-term (non-life) Insurance, together put almost R400-milion back in the hands of consumers who complained in the past financial year.

    In a joint 2021 Annual Report, the Ombudsman for Long-term Insurance (OLTI) noted that R200 million was recovered for complainants while the Ombudsman for Short-term Insurance (OSTI) said the monetary benefit for consumers amounted to R197 188 388..."

    Click to read the full press release

    OSTI's Service Charter reflects OSTI’s values and explains what a complainant and insurer can expect from the office during the registration and investigation of a complaint, and, in turn, what OSTI requires in order to register and investigate a complaint.

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    An increasing number of motor vehicle accident insurance claims are being rejected and disputed on the strength of a clause in insurance policies, namely the reasonable precautions clause, the Ombudsman for Short-Term Insurance (OSTI) has announced...

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    Honesty is the best insurance policy. Blatantly lying or omitting the truth when claiming puts you on a slippery slope. If you get caught committing insurance fraud, you not only could have a claim denied but could experience more extreme consequences...

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    Short-term insurance contracts operate on good faith and it is the insured’s responsibility to disclose all material facts that may reasonably be expected to enable the insurer to properly assess the risk...

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    The policy provided that insured valuables that are governed by the “close personal custody and control requirement”, in it means that the insured property shall be “held by, worn or attached to the insured at all times whilst in transit.”...

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    Please download the OSTI Press Release regarding the COVID-19 Pandemic below.

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    The insurance industry will have a single Ombudsman from 1 January 2020. He is retired Judge, Mr Justice Ron McLaren who brings with him a wealth of judicial experience and knowledge in dealing with and resolving insurance disputes.

    Download the full press release below.

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