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Woza Mediation WOZA MEDIATION SOUTH AFRICA THE POTENTIAL OF MEDIATION IN THE LIFE INSURANCE INDUSTRY IN SOUTH AFRICA ADV JACQUES JOUBERT [email protected] Key Propositions 1. Insurance mediation distinguishes insurance companies from the competition 2. Insurance mediation better manages the risk that clients will have unrealistic expectations 3. Insurance mediation minimises reputational harm and optimises profit Context for discussion International and local mediation landscape Mediation in the US -- -SA Parliament - King III - Rules Board My background and experience Andre Visser, Fitter and Turner and father of 2 daughters. What is commercial mediation? Commercial mediation may be defined as a structured, voluntary, without prejudice and confidential process, commencing after an agreement to mediate had been signed, and in which participants with settlement authority, assisted by an impartial person (the mediator), self-determine a negotiated outcome. Andre Visser Andre is a married 39 year old Fitter and Turner. He has two daughters and lives in Brackenfell. He is an insured under his employer’s Group Scheme underwritten by ABC Insurance (Pty) Ltd which entitles him to a loss of income benefit of R 20 000.00 pm He has a policy of his own with ABC Insurance (Pty)Ltd which entitles him to a lump sum of R 3 million for total and permanent disability He wakes up one morning to discover he had lost sight in one eye. The Ombud will resolve Andre’s claim by: Considering the written submissions/evidence and make a ruling – as a court would - whether or not the insured event falls within the requirements of the policy document, or If the event falls outside the requirements of the policy document, consider the possibility of making a finding based on his equity jurisdiction. Insurance mediation may resolve Andre’s claim by: Engaging him constructively to explore alternative possibilities such as finding a new career path, or starting a small business. Negotiating in a confidential and without prejudice setting in which nothing is agreed until everything is agreed, reduced to writing and signed by all the participants. Reaching a private and confidential win-win settlement taking into account all the factors that apply to his unique circumstances. P P I I Commercial mediation in the life insurance industry SPECIFICITY N N P = Positions I = Interests N = Needs Is there any risk to the insurer should the mediation fail? No, mediation is: Non-binding - nothing is agreed until everything is agreed, reduced to writing and signed by all the participants, and Without prejudice and any offer, concession or admission will be inadmissible during any later process of adjudication, including that of the Ombud. Proposition 1: Insurance mediation distinguishes a company from the competition: The company will be applying the King III principle by rolling out client/stakeholder mediation, follow international best practice and heed the call from Parliament to use mediation - It will also be engaging client/stakeholders in constructive joint-problem solving. Proposition 2: Insurance mediation better manages the risk that clients may have unrealistic expectations: Because claims will be resolved on a case by case basis, exploring the unique circumstances of each client and to be recorded in a private and confidential agreement. (A recent decision by the Ombud in which he exercised his equity jurisdiction has been widely reported in the media. It may have a ripple effect of unrealistic client expectations for the insurance industry.) ( Proposition 3: Insurance mediation minimises reputational harm and optimises profit: By finding creative win-win solutions for contested claims and empowering clients to reset their lenses from being victims of the insurance company to success stories. Taking a legal position Teamwork