Lessons from M.D.L. v. Liberty Group Limited
In March 2021, an Eastern Cape woman experienced a life-changing trauma when she was injured during an attempted hijacking at her home. The incident left her unable to work, and she turned to her salary protection insurance policy with Liberty Group Limited to help her through the financial difficulties that followed. What began as a bid for support quickly escalated into a protracted legal battle when the insurer rejected her claim, citing non-disclosure of certain medical conditions. The dispute ultimately reached the High Court, raising significant questions about the obligations of insurers and policyholders, and the boundaries of fairness in such cases.
The woman, identified in court documents as M.D.L., argued that Liberty had failed to comply with the Policyholder Protection Rules (PPRs) under the Long-Term Insurance Act. She claimed the insurer did not provide sufficient reasons for repudiating her claim and acted unfairly by cancelling her policy based on information she believed had already been disclosed in earlier applications. Liberty, in turn, asserted that her non-disclosure of material medical facts at the time of the policy’s conclusion rendered the agreement void and that their repudiation was in line with the terms of the policy.
The court ultimately ruled in favour of Liberty, finding that the insurer had acted reasonably and in compliance with Rule 17.6.3 of the PPRs. The reasons provided in the repudiation letter were detailed and clear, informing the applicant of the basis for the decision and enabling her to challenge it. Liberty’s decision to void the policy was also upheld, with the court emphasising that insurers are not obligated to revisit information disclosed during previous applications when evaluating a new policy.
A central issue in the case was the applicant’s claim that her past disclosures should have been taken into account. The court rejected this argument, stating that the policy had been issued based solely on the answers provided during a new telephonic application process. Insurers are entitled to rely on the representations made at the time, and applicants bear the responsibility of ensuring their disclosures are complete and accurate.
The materiality of the undisclosed conditions was another area of contention. The applicant argued that her prior medical history, which included conditions such as anxiety and depression, was irrelevant to the policy’s injury-based coverage. The court, however, did not delve deeply into this issue, instead focusing on the contractual nature of the agreement and the applicant’s duty to disclose material facts during the application process.
For insurers, this judgment highlights the critical importance of procedural compliance and clear communication. Liberty’s repudiation letter, which outlined the reasons for its decision in plain language, was a decisive factor in the court’s ruling. Insurers must ensure that their processes not only meet regulatory standards but also provide policyholders with sufficient detail to understand and, if necessary, dispute decisions.
For policyholders, the case serves as a cautionary tale. Even if previous applications included relevant disclosures, policyholders cannot assume that insurers will automatically account for this information in subsequent policies. Each application is treated independently, and the burden of disclosure rests firmly with the applicant.
The case also underscores broader strategic considerations for the insurance sector. While procedural compliance and contractual obligations are paramount, insurers must also be mindful of the perception of fairness and transparency. Disputes over non-disclosure, especially in emotionally charged contexts such as this one, can have significant reputational implications. Balancing the enforcement of policy terms with maintaining trust and goodwill among clients is an ongoing challenge.
The story of M.D.L. v. Liberty Group Limited is a powerful reminder of the complexities involved in underwriting, claims management, and client relations. By fostering clarity, consistency, and mutual understanding, insurers and policyholders alike can minimise the risk of disputes and ensure that the true purpose of insurance—providing support in times of need—is fulfilled.
