Momentum has taken a "positive step" in changing its life insurance policy for victims of violent crime, a Treasury official has said.
This follows public backlash over the insurer's decision not to pay out a R2.4m claim to widowed Denise Ganas, after her husband Nathan Ganas was gunned down in a hijacking. Momentum initially did not pay out the death benefit because Ganas did not disclose that he suffered from high blood sugar levels.
Momentum's decision was met with public outrage.
Treasury's deputy director general Ismail Momoniat had expressed his disappointment in Momentum's treatment of Ganas's claim on radio station 702 on Monday. Momoniat told Bruce Whitfield, host of the Money Show, that this was the kind of behavior market regulators wanted to stamp out.
Eventually on Tuesday afternoon Momentum announced in a statement on its website that it would pay out the death benefit to Natalie. Momentum said it created a policy to pay out an amount equal to the death benefit - limited to R3m - in case of death as a direct result of violent crime, regardless of previous medical history.
"The guarantee will apply immediately to all our life cover clients, and will be applied retrospectively. We are identifying clients who were impacted in this way and we will contact their families to arrange payment. This includes Mrs Ganas," the statement read.
Momoniat, who spoke to Fin24 on Tuesday evening, said the move by Momentum was to be welcomed and called it a "positive step". Treasury will continue to work with the Financial Sector Conduct Authority (FSCA) to engage with industry to review whether current standards are going "far enough" to treat customers fairly, he said.
Momoniat highlighted that the purpose of the Twin Peaks model for the financial sector is necessary in setting standards for industry to treat customers fairly.
Earlier this year, former finance minister Nhlanhla Nene launched two authorities – namely the Prudential and Financial Sector Conduct authorities – to create a financial sector that reduces threats to the financial system and provides better protection to customers.
Momoniat said Twin Peaks is a revolutionary approach and will require a big culture change from financial institutions. Particularly the FSCA focuses on market conduct and how the financial industry conducts business with customers.
The development at Momentum creates a basis for further engagement on standards for treating customers better, Momoniat said.
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