Since his appointment in February 2005, the Insurance Ombudsman Dr. Wickrema Weerasooria has articulated his views as Ombudsman in several media interviews and articles. Recently in June 2006 he issued to the media a statement entitled to Dos and Donts by the Insurance Ombudsman which is carried below.
After completing over one year as the Insurance Ombudsman, Sri Lanka . I would like to highlight the following matters for the guidance of the public who wish to take out insurance policies.
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There are now fifteen companies engaged in Insurance business in Sri Lanka . They are all private companies. They all use Agents to sell their policies. It is normally the Agent who brings the proposal form to you when you want to insure. He also helps you to fill up the form. Sometimes the Agent himself fills up the form and you merely sign. However, please make sure that you know what is stated in the proposal form because once you sign it you cannot be heard to say that it was the Agent who filled it up and therefore you are not responsible. A person who signs a document is liable for what he has signed.
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All insurance contracts are governed by a principle called “utmost good faith” It comes from a Latin term ‘uberrimae fidei'. Many who insure do know this term or understand this legal principle. Normal contracts are not governed by such a requirement. For example, when you buy a loaf of bread or a motor car or a house you can inspect it before you buy it. So you know what you are buying.
But in insurance, as a general rule, the insurance company does not see or inspect the car or the house etc that you insure. They also do not see you physically when you take a life policy. So they depend entirely on what YOU tell them about what you insure. This is don e through the proposal form you have to fill up. This is the reason for the requirement of utmost good faith on your part.
The concept of utmost good faith applies to all insurance contracts whether it be life, fire, motor or home insurance. Only you know about all the facts about what you are insuring. So you must disclose all information asked. Regrettably, as Ombudsman I was unable to help several people whose claims were rejected because they had not honoured the principle of utmost good faith and were liable for non-disclosure of material facts.
You cannot also say that the insurance company's Agent told you that certain questions in the proposal form can be left unanswered or blank or that it is all right to give an incorrect answer. The insurance company is not liable if their own Agent has misled you because it is you who insures and takes a policy – not the Agent – and it is you who sign the proposal form. Utmost good faith is expected from YOU and not the Agent.
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Proposal forms are therefore very important. So read them carefully and do not sign them unless you know and clearly understand what is stated in the proposal form and you agree with the Answers to the Questions in the form.
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In Motor insurance do not under value the vehicle in order to reduce the premium payable. If you meet with an accident and want the vehicle repaired the insurer will for the first time inspect and see vehicle. He will soon realise that the vehicle is worth very much more than the value for which you insured. Then the insurance company can impose a stiff penalty. If you contest, they can offer to buy the vehicle at the value you insured. Thus, there is no escape if you undervalue.
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In Life insurance , however difficult it may be, please pay the premiums due on time. If premiums are not paid, the life policy can lapse. You cannot then get your money back unless there is a ‘maturity value' or “surrender value” to the policy which is normally a minimum of three years. Also, remember during that time your life was covered. Some people have asked me to direct the insurance company to refund the premiums paid. This cannot be don e unless there is a ‘Surrender Value' – because you were protected and covered during that time.
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If your life policy lapses because you have not paid premiums on time, the insurer can ask you to fill up a new proposal form to continue the policy. By this time, your health conditions may have changed and deteriorated with age and you may have developed medical ailments which you have now to disclose. If you had not allowed your earlier policy to lapse, you would not have had the need to fill up a new proposal form and the insurance company had accepted the risks of the ailments that you may have developed. So please ensure to pay the premiums on time and do not allow your life policy to lapse.
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Several persons have also complained to me about the bonuses received on their life policies. The Agents had promised very high bonuses and even given such an assurance in writing on the insurance company letterheads. But the insurance company is not liable for such assurances of Agents relating to bonuses. Bonuses are generally calculated on the interest rates in the country. Thus, they can fluctuate in amount and are not necessarily fixed amounts. You should contact the insurance company itself about any bonus issues.
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Currently I am having problems on claims relating to Third Party cover. This is mainly where third party motorists and pedestrians have been affected by motor accidents. The insurance companies are only liable if the steps set out in the Motor Traffic Act have been observed. Many members of the public are unaware of these steps. So please consult a knowledgeable person if you wish to make a third party insurance claim.
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If an accident occurs which you think is covered by the insurance policy you have taken – for example, if there is damage to your workplace or factory by a fire or electrical problems or if there is a loss by burglary, you must inform the insurance company immediately (apart from notifying the Police etc). Do not repair the damage caused by the accident without getting the approval of the insurer. It is a condition in your policy that you will inform the insurer and get his approval. If you do not abide by conditions set out in your policy, the insurer can eject liability. Many people do not read their insurance policies.
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I must also issue a caution to anyone who wishes to travel inside an Ambulance to accompany a patient. I have found that some Ambulances have not taken proper insurance cover. I inquired into a case recently where three persons who travelled inside an Ambulance accompanying a patient were badly injured by a accident. The patient also died. It appears that while the Ambulance itself and the driver was covered the Ambulance had no insurance cover to protect those who travelled inside it. So before you get into an Ambulance make sure that you are covered in the event of an accident.
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We must have greater Awareness about Insurance. The concept of insurance is not sufficiently known or understood in Sri Lanka . Unlike say Agriculture where our people are culturally adapted, Insurance is entirely an English concept. I have asked the Insurance companies to create greater Awareness about Insurance generally and not restrict their advertising budgets to Marketing their respective policies. Because of a lack of adequate knowledge about Insurance and its benefits and pitfalls, I strongly advise those who take out large insurances to go through a good broker. There are over Fifty insurance brokers in the country who are registered with the Insurance Board of Sri Lanka (IBSL).
Let me conclude by informing the public that my office is located at 143A, Vajira Road Colombo 5. (The same road where Visakha Vidyala is located). My Telephone & Fax Nos. are as follows: 4528671 & 4528670. I am also on the Internet/Web site and Email as follows.www.insuranceombudsman.lk and info@insuranceombudman.lk
We provide a free, friendly, accessible service. If you have any dispute relating to insurance, first contact the insurance company. If there is no satisfactory solution apply to our office. There are no special forms to fill up. Just send a signed letter with the policy reference number and name of the insurer briefly indicating your complaint.
