Insurance in South Africa describes a mechanism in that country for the reduction or minimisation of loss, owing to the constant exposure of people and assets to risks (be they natural or financial or personal).
"[2] The following legislation is of special importance to South African insurance law: Classification is often merely a matter of convenience, but there may be compelling reasons for it; it may even reflect a difference in underlying legal principles.
Such consent may be termed “constructive consent.” Of course, there is always room also for the application of the doctrine of estoppel, if a litigant can satisfy its more stringent requirements, and if he wishes to avail himself of this remedy in order to hold a party bound to the appearance of consensus he has created.
Pending the conclusion of their negotiations, the parties often conclude interim insurance to cover the proposer during the period prior to the final decision on the main contract.
The proposal form invariably contains a series of questions put by the insurer which must be answered to obtain information necessary for calculating the risk.
Excesses led in the Sixteenth and Seventeenth Centuries to the outright banning of life insurance, for example, in France, the Dutch Republic and Sweden.
As we have seen, South Africa formally imported the doctrine of insurable interest from England, but in 1977 the legislature repealed the colonial ordinances which had achieved this.
In other words, a breach of the duty of good faith renders the contract voidable at the instance of the insurer, after he has been notified of the non-disclosure.
A statement may, for instance, be inaccurate because it is incomplete and so mislead the other party to the contract by the suppression of a part of the true facts.
As a result, the other party is induced to enter into the contract, or to agree to specific terms thereof, whereas he would not have done so had those facts been disclosed.
The court rejected the expression as “alien, vague [and] useless [... and] without any particular meaning in law,” explaining Despite these remarks, and despite the fact that the House of Lords has subsequently, with reference to them, noted that “the concept of uberrima fides does not appear to have derived from civil law and [that] it has been regarded as unnecessary in civilian systems,” Reinecke observes that "old habits die slowly," and that insurance contracts are still occasionally referred to as "contracts of the utmost good faith."
The duty of disclosure relates to material facts, of which parties had actual or constructive knowledge prior to the conclusion of the contract of insurance.
Breach of the duty of disclosure amounts to mala fides or fraud, and the aggrieved party may avoid contract.
In M&F v Oudtshoorn, the Appellate Division formulated it thusly: whether or not, having regard to the circumstances, the undisclosed information is reasonably relevant to the risk, or to the assessment of the premium.
In other words, are the facts of such a nature that knowledge of them would, objectively seen, probably influence a represent in deciding whether or not to conclude the contract, and on what terms to do so?
The court applies a version of the reasonable-person test: that is, whether a reasonable person would have regarded the particular facts as relevant to the decision of an insurer concerning the assessment and underwriting of the risk.
The test, then, refers to those facts which are objectively and reasonably related to an insurer's decision when all the circumstances of the case are taken into account.
South African law, however, long appeared to favour the view that only material facts within one's actual or personal knowledge were included in the duty of disclosure.
To avoid it, he applied for three separate life-insurance policies with three insurance companies for small amounts which, when added together, would otherwise have required him to undergo a medical examination.
AA advertised the policy as including “free life cover [...] available free of medical evidence [...] no medical questions whatsoever.” AA instructed its brokers to market the policy on this basis, and to sell it to applicants who were actively engaged in their usual occupations and fit enough to lead normal lives.
AA's broker told Singh, the insured in casu, that she did not have to disclose anything about her health, and that the proposal form which she signed did not require her to provide medical details.
AA subsequently sought to avoid liability on the ground that the insured had failed to disclose that she was suffering from cervical cancer.
A tendency identified on the part of English courts has been to treat questions apparently eliciting the insured's opinion as demanding statements of fact; the same appears true of local decisions.
In Cole v Bloom,[22] the insurer avoided liability in respect of a policy containing a promissory warranty that all doors, windows and roofs of a salesman's vehicle (used to convey samples) would be closed and locked when the vehicle was left unattended.the courts apply the strict approach when it comes to promissory warranties as they are not governed by the statute of Insurance Act.
In Kliptown Clothing v Marine & Trade Insurance[23] the plaintiff, a retail general dealer, obtained a burglary policy from the defendant.
In an action claiming a declaration that the defendant was obliged to make good the loss, Marine & Trade Insurance pleaded breach by the plaintiff of a warranty that the insured keeps, and during the whole of the currency of the policy shall keep, a complete set of books, accounts and stock sheets or stock books, showing a true and accurate record of all business transactions and stock in hand, and that such books, accounts and stock sheets or stock books shall be locked in a fire-proof safe or removed to another building at night and at all times when the premises are not actually open for business.Marine & Trade Insurance alleged The Appellate Division held that the warranty meant As the defendant had failed to prove either a general breach of the warranty arising out of what the plaintiff had failed to keep in a safe, or a particular breach based on the recording in the books of the purchase of certain articles, the court found for the plaintiff.
The meaning of these words is important: If, then, the warranty is not based on a “representation”, or “failure to disclose” or “non-disclosure”, the insurer will still be able to avoid liability under the contract.
As a general rule, the words “representation”, “failure to disclose” and “non-disclosure” refer to existing facts as well as to future events.
In respect of the terms and benefit details contained in the reinsurance agreement, the same principles apply as for ordinary insurance contracts.
The court found, relying on Barkhuizen, that the question of the fairness of exercising contractual rights does not arise when it involves no public-policy considerations or constitutional values.