1. JENNIFER PREISS
SUE MYRDAL

2. IS IT FAIR/UNFAIR?
Senior citizen served a cup of hot coffee at the drive-through
Opened the cup in her car and spilled it on her lap
Jury: McDonalds negligent; awarded her 3 million dollars

3. IS IT STILL FAIR/UNFAIR?
The coffee is so hot (1900 F.) that it caused third degree burns to thighs/genitals
McDonalds had complaints the year before that the coffee was too hot; warned several times to cool it by the authorities
McDonalds admitted that the coffee was not fit for human consumption at that temperature
The woman offered to settle for just her medical bills ($2 000) but McDonalds refused

4. IS IT STILL FAIR/UNFAIR?
Coffee must be served (not consumed) at that temperature for optimum aroma and flavour
Nobody wants take-away coffee cold
McDonalds sold several billion cups of coffee per year
People know that hot coffee is dangerous – they should blow on it or hold it away from selves

5. MISSION
TO RECEIVE AND CONSIDER COMPLAINTS AGAINST SUBSCRIBING INSURERS AND TO RESOLVE SUCH COMPLAINTS THROUGH MEDIATION, CONCILIATION, RECOMMENDATION OR DETERMINATION

6. FEATURES OF THE OMBUDSMAN SCHEME
Independence
Accountability
Ready, free access for complainants
Procedural informality

7. FEATURES OF THE OMBUDSMAN SCHEME (cont.)
Resolution via mediation, conciliation
Cost effectiveness
Procedural fairness
Binding decisions in respect of subscribers

8. FEATURES OF THE OMBUDSMAN SCHEME (cont.)
Retention of Complainants right of access to courts
Prescription halted during process
Internal appeal procedure
Equity jurisdiction
Voluntary scheme

9. WHO CAN COMPLAIN TO US? ANY POLICYHOLDER SUCCESSOR IN TITLE
BENEFICIARY
PREMIUM PAYER
INSURED LIFE
WHO HAS A COMPLAINT ABOUT A LIFE INSURANCE POLICY AGAINST A SUBSCRIBING INSURER

10. In considering a complaint we take into account
HOW THE OFFICE WORKS
Not a court
In considering a complaint we take into account
Probabilities (standard is balance of probabilities)
Onus of proof
Legal principles
Considerations of equity/fair play
If not possible to resolve a dispute of fact and both parties agree, an informal hearing may be held

11. HOW THE OFFICE WORKS (cont.)
We seek outside expert advice when necessary
We often try to settle a matter
We give a preliminary ruling first – both parties have further chance to argue
Thereafter a final ruling is made

12. HOW THE OFFICE WORKS (cont.)
Once a ruling is final the unsuccessful party may apply for leave to appeal to an appeal tribunal
We can award compensation
We report systemic issues to the industry and FSB

13. WHAT WE EXPECT FROM INSURERS
Responses within time frames
Full information in response to complaints
Co-operation in resolving the dispute – willingness to consider possible settlement
Feedback if there is a problem
Documentation attached – see checklist

14. WHAT WE EXPECT FROM INSURERS
Refer to our website:
Home Office Personnel
What we do Topics and Cases
How to complain Papers and Presentations
Rules Process Audit
Common problems Practice notes
Annual Reports News
Information Brochures Code of Ethics
Helpful links Newsletters

16. SUMMARY OF CASES FINALISED
NATURE OF COMPLAINT
TOTALS
% TO TOTAL
2007
Poor service
1 251
26%
Claims declined
2 024
43%
Non-disclosure
139 3%
Policy performance
318 7%
Surrender values
147
Misselling
391 8%
Lapsing
122
Miscellaneous
308
TOTAL
4 700
100%

17. CASES FINALISED WHOLLY OR PARTIALY IN FAVOUR OF THE COMPLAINANT
44% of cases are resolved in favour of complainants
NATURE OF COMPLAINT
W/P – 2007
Poor service
58%
Claims declined
38%
Non-disclosure
33%
Policy performance
22%
Surrender values
37%
Misselling
56%
Lapsing
Miscellaneous
41%
TOTAL
44%

18. SOME CLAIMS ISSUES DEFENCES EXCLUSION CLAUSES
WHAT IS AN EXCLUSION CLAUSE – EXAMPLES
ONUS OF PROOF
QUALITY OF EVIDENCE
BALANCE OF PROBABILITIES

19. SOME CLAIMS ISSUES WAITING PERIODS TIME BARRING PROVISION
i.e. TIME WITHIN WHICH TO CLAIM
INSURABLE INTEREST
FRAUD
FULL INFORMATION OF SUSPECTED UNLAWFUL CONDUCT
GROUNDS FOR SUSPICION
WHY DISCLOSURE WOULD BE PREJUDICIAL

20. TRENDS / PROBLEMS IN CLAIMS
DEATH CLAIMS
HIV/AIDS EXCLUSIONS DECLINING
DISABILITY
PSYCHIATRIC CLAIMS
INCOME DISABILITY : DEFINITION OF INCOME
DREAD DISEASE / CRITICAL ILLNESS
DRAFTING & INTERPRETATION PROBLEMS

21. NON-DISCLOSURE Long-term Insurance Act of 1998 Section 59 (1) (a)
The obligations of the insurer shall not be excluded or limited on account of any failure to disclose information
“unless that representation or non-disclosure is such as to be likely to have materially affected the assessment of the risk under the policy concerned at the time of its issue…….”

22. NON-DISCLOSURE Section 59 (1) (b)
sets out the test as to whether non-disclosed information was material or not:
“The representation or non-disclosure shall be regarded as material if a reasonable, prudent person would consider that the particular information constituting the representation or which was not disclosed, as the case may be, should have been correctly disclosed to the insurer so that the insurer could form its own view as to the effect of such information on the assessment of the relevant risk.”

23. NON-DISCLOSURE The “reasonable prudent person” in our view is
neither the actual applicant for insurance;
nor the actual insurer;
but a hypothetical person standing in the shoes of the applicant, with the knowledge and appreciation that a lay person would possess of the factors an insurer would take into account in assessing the risk.

24. NON-DISCLOSURE
SOME ISSUES:
PARTIAL RESCISSION
FORFEITURE OF PREMIUMS
RECONSTRUCTING THE CONTRACT

25. NON-DISCLOSURE UK FINANCIAL OMBUDSMAN SERVICE GUIDELINES:
INSURERS SHOULD ASK QUESTIONS
REMEDY DEPENDS ON FAULT
WHAT WOULD THE INSURER HAVE DONE IF IT HAD BEEN TOLD THE TRUTH?
CUT-OFF PERIOD?
INTERMEDIARY DEEMED TO BE INSURER’S AGENT UNLESS THE CONTRARY CLEAR