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The Non-life Insurance Division of the National Financial Ombud Scheme South Africa (NFO) has determined that the absence of a valid Professional Driving Permit (PrDP) did not justify an insurer’s rejection of a claim following the armed hijacking of a goods truck.
The ruling, issued recently, addressed a dispute in which an insurance company denied coverage for the loss of a vehicle, citing the driver’s expired PrDP despite his possession of a valid driver’s licence.
The insurer argued that the vehicle should not have been operated without a current PrDP, a legal requirement for professional drivers and that paying the claim would contravene public policy by endorsing illegal activity. However, the NFO’s Non-life Insurance Division concluded that the expired permit was not material to the hijacking incident, overturning the insurer’s stance.
In its recommendation, the NFO emphasised that the core issue was materiality—specifically, whether the lack of a valid PrDP contributed to the loss.
Edite Teixeira-Mckinon, lead ombud of the Non-life Insurance Division, stated: “The driver’s actions did not precipitate the hijacking, rendering the expired PrDP a regulatory infraction rather than a causal factor. The insurer must demonstrate a direct link between the absence of a valid PrDP and the realised risk, which it failed to do.”
Teixeira-Mckinon further noted that while a PrDP is mandated to enhance road safety, its absence in this context did not exacerbate the risk of hijacking. “The loss stemmed from a criminal act, not a deficiency in driver qualifications. Even with a renewed PrDP, the incident would not have been averted,” she said, adding that no evidence suggested otherwise.
The recommendation referenced the 1995 case of Everite Building Products Ltd v. Mutual & Federal Insurance Co Ltd [1995] 1 Lloyd’s Rep. 531, which underscored that insurance policies should align with the intended coverage of risks, not be voided by minor, unrelated breaches. “The insurer’s rejection based on an expired PrDP contradicts this principle,” Teixeira-Mckinon said.
Addressing the insurer’s public policy argument, the NFO acknowledged its relevance but distinguished between systemic violations and isolated incidents. “Penalising the claimant for a single oversight, absent a connection to the loss, does not align with the fairness principles embedded in public policy,” the ruling stated.
Initially, the insurer rejected the NFO’s recommendation to reconsider and settle the claim, prompting escalation to a provisional ruling. This ruling upheld the original findings, noting that PrDP renewal is an administrative process, not a reassessment of driving competency. It concluded that a strict interpretation of the policy would yield an unjust outcome, invoking fairness and equity jurisdiction to resolve the matter.
Following the provisional ruling, the insurer agreed to comply and settled the claim. Notably, the driver involved in the incident has since obtained a valid PrDP. The NFO emphasised that each complaint is evaluated on its individual merits.
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