African Life Comes Under Fire by Ombudsman

October 7 - The Ombudsman for Financial Services Providers, Charles Pillai has issued a stern warning to African Life, trading as Sanlam Sky Solutions, for failing to produce the document of authorization on an insurance policy that had instalments deducted from the salary of an unsuspecting teacher.

Monthly insurance premiums were deducted each month for a period of ten months from the salary of a widowed schoolteacher, Nohnlanhla Clara Khawula, through the use of the state salary system, Persal. Even after Khawula questioned the deductions, African Life and the agent who was responsible for the insurance policy could not produce a document of authorization for the policy.

When it was discovered that the agent had fraudulently used Khawula's personal details to open an insurance policy of which he was the beneficiary, the teacher asked that the insurance company halt payments. However, it was only after Legal Wise intervened on her behalf and took the matter to the ombudsman, did African Life stop the deduction of R195 from her salary each month.

"I find it highly undesirable that an insurance company of the stature of African Life is able to issue a policy without scrutinizing or even viewing an application form or proposal," said Pillai, when ruling on the case. He put the blame on all three in the case - African Life as first respondent, Timir Financial Service, the insurance agency, as second respondent, and the shady agent, Leonard Mqadi as third respondent.

"The first respondent," ruled Pillai, "notwithstanding the absence of an application form, readily issued a policy and proceeded to deduct premiums from the complainant's salary. The unauthorized policy was clearly a fraud committed by the third respondent. After being informed by the unauthorized policy by the complainant, no action was taken against the third respondent. For a period of approximately 20 months after finding out about the unauthorized policy, third respondent continued to work for the first and second respondents as an authorized representative."

African Life was ordered to pay back all instalments deducted from Khawula's account plus 15% interest.