Policies sometimes provide for determinations to be made at the insurer’s discretion or for insurers to form an opinion as to relevant facts.
The English judgment in Braganza v BP Shipping Limited & Another provides some assistance as to what an insurer must do to avoid having a decision successfully challenged.
Although not an insurance case in itself, the relevant clause in the context of employment, read:
“For avoidance of doubt, compensation for death, accidental injury or illness shall not be payable if, in the opinion of the Company, the death, accidental injury or illness resulted from amongst other things, the Officer’s wilful act, default or misconduct, whether at sea or ashore …”
Mr Braganza disappeared from an oil rig in the North Sea, with the employer subsequently forming the opinion based on an investigation, that the most likely explanation for the disappearance was suicide. His spouse brought a claim under the contract for the death benefits.
The question was whether the employer was entitled to form the opinion it had. The final court of appeal found that the employer should have sought more cogent evidence of suicide than it had before finding that suicide had taken place.
The judgment is useful in that it deals both with the question of:
- What the proper approach is in considering whether a person committed suicide; and
- What makes the decision of the fact-finder reasonable.
The court considered whether the correct matters had been taken into account in reaching the decision, and secondly, even though the correct things had been taken into account, whether the result is so outrageous that no reasonable decision-maker could have reached it. What is not expected of the lay person is both the factual and legal investigations demanded of a court.
Investigations had to be carried out with honesty, good faith and genuiness and had to avoid arbitrariness, capriciousness, perversity and irrationality.
A South African court is likely to adopt a similar approach.