Alpha Direct loses against NBFIRA
Mpho Mokwape | Friday August 14, 2020 12:58
The insurer before Court proceedings had refused to pay its two clients, one for a stolen vehicle after suspecting foul play and another for damage to property and later challenged NBFIRA’s powers in court. Alpha Direct had refused to pay client, Tumelo Motlhala for the stolen vehicle and Arsh Investments for damage to its property after its building was affected a storm.
The Court of Appeal in its judgement dismissed the appeal by the insurer saying the whole appeal was without merit.
Justice Ian Kirby explained that it was clear that NBFIRA was within its right to make direction, which affected the contractual rights of the parties under the insurance policies, in question.
“It did not act in a manner that is beyond its powers under the NBFIRA Act, which was the review ground relied upon,” he said.
Justice Kirby also said it was clear according to the regulations that the institution was to comply with its direction from the regulatory regardless of its institution’s views as to its rights, liabilities and obligations under any contract including an insurance policy.
However, the Judge President pointed that NBFIRA should be slow to appear to be micro-managing the day-to-day affairs of insurance companies who handle all manner of claims in their own professional judgement on a day-to-day basis.
He said the regulator should only intervene in what one would hope would be exceptional cases where the unequal bargaining power of the parties was being unfairly exploited by the insurer according to the judgement of the regulator.
“The normal response would be to decline to intervene and to leave the parties to their remedies in Court proceedings,” he said.
He noted that its discretion was to be exercised in good faith entirely according to its own judgment.
According to the background of the case, the two repudiated claims aroused when one Motlhala insured his Landrover Discovery vehicle used by his wife against accident and theft.
Then on the evening of late November 2015 it was claimed that the wife parked the vehicle outside her home, locked it and placed the keys in her handbag, which was on her bed. The bag was fished through the window during night by a thief using wire and its contents were removed including the car keys and the car stolen.
According to court documents, Alpha Direct hired a private investigator, who later suspected foul play because there was no forced entry to the Motlhala’s home. “The insurer refused to accept the claim on grounds that the insured had ‘failed to convince Alpha Direct’ how the car keys were stolen without forcible entry to the home, and that the insured failed to take reasonable steps to prevent the vehicle’s theft by keeping it within a secure perimeter and placing its keys in a safe place,” read the documents.
The insured then complained to NBFIRA and after obtaining the insurer’s version of events ruled that the repudiation was unjustified.
On claim two, Arsh Investments insured its buildings against the fire and storm damage then heavy rains on March 8, 2016 left the fiberglass lining of swimming pool buckled up and unserviceable and made claim which Alpha Direct rejected despite its assessor having agreed that they compensate for the replacement of the pool and that they bear the cost for the repaving of the pool’s surrounding.
The investment company then complained to NBFIRA.