Two major court battles have unfolded between clients and Sanlam Insurance over the insurer’s refusal to honour claims. The disputes, which have captivated Uganda’s legal and financial sectors, involve a contested medical insurance claim and a professional indemnity insurance disagreement. In both cases, Sanlam appealed against decisions made by the Insurance Regulatory Authority (IRA).
The First Battle: A Father’s Fight for His Son’s Medical Treatment
The first case, Sanlam Life Insurance (Uganda) Limited v Minet Uganda Insurance Brokers, involved a dispute over a medical insurance claim for a child diagnosed with a severe hearing impairment. The father, [name withheld for privacy reasons], had enrolled his son, [name withheld for privacy reasons], in a medical insurance scheme through Minet Uganda Insurance Brokers, acting on behalf of Ernst & Young Certified Public Accountants.
Sanlam refused to pay the claim of USD 41,175 (UGX151,753,000) for cochlear implants, citing non-disclosure of a pre-existing condition. The insurer argued that the father had concealed crucial medical information regarding his child’s history with otitis media. However, the Insurance Regulatory Authority ruled in favor of the complainant, stating that there was no prior knowledge of the condition at the time of enrollment. Dissatisfied with the ruling, Sanlam escalated the matter to the Insurance Appeals Tribunal.
The Tribunal found that brokers have the legal standing to file claims on behalf of insured clients and dismissed Sanlam’s arguments regarding locus standi. It ruled that the insured had disclosed sufficient medical history, and the insurer’s underwriting team’s failure to seek further clarifications did not warrant the denial of the claim. Ultimately, the Tribunal upheld the IRA’s decision, compelling Sanlam to pay the claim.
The case has broader implications for the medical insurance industry in Uganda. It highlights insurers’ responsibilities to properly evaluate claims before making decisions and ensure that they do not reject valid claims on technical grounds. The ruling also affirms that insured individuals should not bear the consequences of an insurer’s failure to conduct adequate risk assessments during underwriting. It raises questions about the extent of due diligence expected from insurance companies and underscores the necessity of transparent policy terms.
The Second Battle: A Bank’s Quest for Compensation Over Faulty Valuations
The second case, Sanlam General Insurance (Uganda) Limited v Finance Trust Bank, involved Finance Trust Bank’s attempt to recover UGX 3.6 billion in losses due to erroneous property valuations by a surveyor, Katuramu & Company Consulting Surveyors Ltd. The surveyor had professional indemnity insurance coverage with Sanlam, but when Finance Trust Bank sought compensation for the financial losses caused by the surveyor’s negligence, Sanlam refused to pay.
Sanlam argued that the claim was time-barred and that the bank’s own imprudence contributed to the loss. The IRA ruled against Sanlam, directing it to pay UGX 1.9 billion as an adjusted settlement. Sanlam appealed, citing procedural irregularities in the IRA’s decision-making process and questioning whether the bank had the legal right to claim under the policy.
Absa, ENS Africa, A&O Shearman and Nomura Advise Asahi Holdings on USD 2.3bn Acquisition of 65% Stake in EABLThe Appeals Tribunal ruled that professional indemnity insurance inherently covers third parties who suffer financial loss due to professional negligence. Since the bank relied on the surveyor’s expertise in approving loans, it had the legal right to claim under the policy. The Tribunal also dismissed Sanlam’s procedural objections, emphasizing that the insurer had adequate opportunities to present its case during the IRA hearings. The ruling upheld the IRA’s decision, forcing Sanlam to compensate the bank for its losses.
This decision is significant for financial institutions that rely on professional services to make lending decisions. It reaffirms that insurance policies designed to protect against professional negligence must be honored when valid claims arise. It also places emphasis on the ethical obligations of professionals whose services are insured, reinforcing the need for accountability in valuation and risk assessment.
CEO East Africa Magazine understands that Sanlam General Insurance and Sanlam Life have appealed both rulings.
Legal and Industry Implications
The rulings reinforce the IRA’s authority in dispute resolution and highlight the obligations of insurers to honor legitimate claims. They also underscore the need for clear disclosure policies and due diligence in underwriting and professional indemnity coverage.
For policyholders, these verdicts represent a victory against what insurers perceive as systemic reluctance to fulfill their obligations. On the other hand, Sanlam’s appeals reflect broader industry concerns about claim abuses and the financial sustainability of underwriting high-risk policies.
As insurers and policyholders digest these landmark rulings, one thing is clear: the battle over claim settlements in Uganda’s insurance sector is far from over. The outcomes of these cases may shape future policies, requiring insurers to adopt more transparent practices in evaluating claims and defining policy terms. The heightened scrutiny on insurance claim handling may also encourage more policyholders to challenge denied claims, setting a precedent for increased regulatory oversight in the sector.
The court rulings against Sanlam highlight insurers’ obligations to honor legitimate claims. They also set precedents for transparency in underwriting, fair claim assessments, and policyholder rights.