Wakilii

Asiimwe v UAP Old Mutual Life Assurance (Application 1 of 2023)

Tribunal · [2023] UGIAT 3 · 2023 Application Granted AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Appeal from decision of Insurance Regulatory Authority (IRA) regarding surrender value computation of life assurance policy
Decision
Application allowed; respondent ordered to pay surrender value of UGX 13,364,169.9975 plus general damages of UGX 2,000,000 and costs

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Holding

The Tribunal held that the Insurance Regulatory Authority acted functus officio when it altered its decision of 6 October 2022 by issuing a subsequent decision on 13 December 2022 without affording the appellant an opportunity to review new computations. The IRA's subsequent decision was irregular, made beyond the one-month review period prescribed by the Insurance Complaints Bureau Guidelines, and violated principles of natural justice. The Tribunal found that the appellant's life assurance policy had not lapsed at 71 months as determined by the IRA, but continued for 83 months because the insurer continued accepting premium payments, thereby waiving any right to claim lapsation. The appellant was entitled to surrender value computed on 83 months of premiums paid.

Outcome

Application allowed; respondent ordered to pay surrender value of UGX 13,364,169.9975 plus general damages of UGX 2,000,000 and costs

Facts

On 17 October 2014, the appellant entered into a ten-year life assurance policy with the respondent with monthly premiums of UGX 150,000. The appellant paid premiums consistently from October 2014 until September 2021, accumulating UGX 12,480,000 in total payments. She stopped payments due to the respondent's failure to issue premium receipts and statements and charging interest on premiums despite timely payment. In July 2022, the appellant sought to surrender the policy. The respondent offered only UGX 1,830,000 as surrender value. The appellant complained to the Insurance Regulatory Authority (IRA). On 6 October 2022, the IRA directed the respondent to compute surrender value based on 83 months of premiums paid. However, on 13 December 2022, the IRA altered its decision and directed payment based on only 71 months, prompting this appeal. The respondent did not appear or file a response despite proper service.

Issues

  1. Whether the IRA decision of 13 December 2022 after its decision of 6 October 2022 was functus officio?
  2. Whether the decision of 13 December 2022 was illegal and irregular occasioning a miscarriage of justice against the Appellant?
  3. Whether the claim amount payable was adequately computed?
  4. What remedies are available to the parties?

Orders

  • Application allowed.
  • Respondent to pay appellant UGX 13,364,169.9975 being surrender value and accrued bonuses of the policy as of 83 months.
  • Appellant awarded general damages of UGX 2,000,000 against respondent.
  • Costs of the application awarded to appellant.
  • Orders to be complied with within 30 days from date of issuance of certificate of taxation.
  • In event of failure by respondent to comply, IRA directed to take appropriate action to ensure compliance.

Rules and key headnotes

Administrative Law — Functus Officio — Review of Administrative Decisions — Time Limits
An administrative authority becomes functus officio once it has made a final decision and cannot alter that decision in the absence of statutory authority to do so. Where enabling legislation provides for review of decisions, such review must be exercised within prescribed time limits and in accordance with procedural requirements.
Administrative Law — Natural Justice — Audi Alteram Partem — Right to Be Heard
Where an administrative body receives new evidence or computations that may affect its decision, principles of natural justice require that the affected party be given an opportunity to review and respond to such evidence before a decision is made. Failure to afford such opportunity constitutes procedural impropriety and violates the audi alteram partem rule.
Insurance — Life Insurance — Policy Lapsation — Waiver by Acceptance of Premiums
Where an insured defaults on premium payments causing a life insurance policy to lapse, but the insurer subsequently accepts premiums in arrears without protest, the insurer waives its right to contend that the policy had lapsed. Conditions of revival of a lapsed policy may be waived by acceptance of premiums tendered after expiration of the grace period.
Insurance — Life Insurance — Notice of Lapsation — Duty to Notify Policyholder
An insurer intending to cancel a life insurance policy for non-payment of premiums must give written notice to the policyholder stating the premium amount, due date, and the time within which the policy will be cancelled if premium is not paid. Failure to provide such notice renders any purported lapsation invalid.
Insurance — Life Insurance — Surrender Value — Duty to Disclose Computation Formula
Where a life insurance contract provides for payment of surrender value calculated following a formula known to the insurer alone, the insurer must disclose the formula and supporting computations to the policyholder. One party cannot require the other to accept a calculation made per a formula without disclosure and an opportunity to verify correctness.
Contract Law — Breach of Contract — Insurance Premiums — Waiver of Breach
Payment of insurance premiums is contractual and failure to pay as stipulated constitutes breach of policy terms which may lead to termination. However, where the insurer continues to accept late premium payments without objection, it waives the right to terminate the contract for that breach.
Administrative Law — Decisions of Administrative Bodies — Form and Content — Duty to Give Reasons
Administrative decisions with serious consequences for a person's rights must contain key information including evidence adduced, relevant facts, conclusions, findings, and reasons for the decision. A decision that fails to provide adequate reasons or explain departure from an earlier position is procedurally defective and does not amount to a valid decision in law.

Legislation cited (20)

  • Insurance Act No. 6 of 2017 s.10
  • Insurance Act No. 6 of 2017 s.12(1)(b)
  • Insurance Act No. 6 of 2017 s.12(1)(e)
  • Insurance Act No. 6 of 2017 s.12(1)(f)
  • Insurance Act No. 6 of 2017 s.12(1)(h)
  • Insurance Act No. 6 of 2017 s.12(1)(j)
  • Insurance Complaints Bureau Guidelines, 2022 Guideline 5
  • Insurance Complaints Bureau Guidelines, 2022 Guideline 8
  • Insurance Complaints Bureau Guidelines, 2022 Guideline 9
  • Insurance Complaints Bureau Guidelines, 2022 Guideline 14(3)
  • Insurance Complaints Bureau Guidelines, 2022 Guideline 14(6)
  • Insurance Complaints Bureau Guidelines, 2022 Guideline 15(2)
  • Insurance Complaints Bureau Guidelines, 2022 Guideline 15(3) Item 5
  • Insurance Complaints Bureau Guidelines, 2022 Guideline 16(1)
  • Insurance Complaints Bureau Guidelines, 2022 Guideline 16(2)
  • Insurance Complaints Bureau Guidelines, 2022 Guideline 16(5)
  • Insurance Complaints Bureau Guidelines, 2022 Guideline 20(1)
  • Insurance Complaints Bureau Guidelines, 2022 Guideline 22(2)
  • Constitution of the Republic of Uganda Article 126(2)(e)
  • Civil Procedure Rules Order 21

Cases cited (19)

  • Chandler v Alberta Association of Architects (1989) 2 S.C.R 848
  • Goodman Agencies Limited v Attorney General & Anor (Constitutional Petition No. 003 of 2008)
  • Thompson, trading as Maharaj and Sons v. Chief Constable, Durban 1965 (4) SA 662 (D) at 667C-D
  • Registered Trustees of Ker Bwobo (Land Development Trust) v Nwoya District Land Board (Miscellaneous Civil Application No. 013 of 2018)
  • Emily Mbabazi v Rural Electrification Agency & Ors (Misc Cause No. 165 of 2019)
  • Orient Bank Limited v Avi Enterprises Limited (High Court Civil Appeal No. 002 of 2013)
  • Ali Ssekatawa v Attorney General & 2 Others (Miscellaneous Application No. 293 of 2017)
  • Legal & General Assurance Society Ltd v CCA Stationery Ltd [2003] EWHC 2989 (Ch)
  • Ariho v Governing Council of Uganda College of Commerce, Pakwach (Misc. Civil Cause No. 0009 of 2016)
  • Doody v Secretary of State for the Home Department [1993] 3 All E.R. 92
  • Oriental Insurance Brokers Limited v Transocean (U) Limited (Civil Appeal No. 55 of 1995)
  • J A Chapman & Co Limited v Kadirga Denizcilik Ve Ticaret [1998] Lloyd's Rep IR 377
  • Figre Limited v Mander [1999] Lloyd's Rep IR 193
  • Foskett v McKeown [2000] UKHL 29
  • McPhee v Colina Insurance Ltd [2023] UKPC 8
  • Takiya Kashwahiri & Anor v Kajungu Denis (Court of Appeal Civil Appeal No. 85 of 2011)
  • Kibimba Rice Limited v Umar Salim (Supreme Court Civil Appeal No. 17 of 1992)
  • Electricity Regulatory Authority v Watuwa Jimmy Cosmas (Civil Appeal No. 129 of 2018)
  • Luzinda v Ssekamatte & 3 Ors (Civil Suit No. 3 of 2017)

Full judgment

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Asiimwe v UAP Old Mutual Life Assurance (Application 1 of 2023) [2023] UGIAT 3 (26 April 2023)
Source: this page presents Wakilii’s issue analysis and metadata for a publicly reported Ugandan judgment. Any AI-generated summary is marked as such. Judgment text is sourced from the Uganda Legal Information Institute (ulii.org). Wakilii is not affiliated with ULII.