NEWS
MBABANE – ESRIC wants a review of the Ombudsman of Financial Services’ ruling, which validated a claim because loan repayments from a joint estate reportedly constitute a contribution by both spouses in community of property.
The decision of the ombudsman, which the Eswatini Royal Insurance Corporation (ESRIC) is challenging, ordered the latter to pay out a benefit claim of E667 301.68 following the death of the wife of a former employee of Swaziland Building Society (SBS). The ombudsman also ordered ESRIC to refund the former SBS employee, Lunga Motsa, E88 713.80 (plus 9 per cent interest) for mortgage protection insurance fees charged after the claim was initially lodged.
Contribution
The ombudsman found that ESRIC failed to prove that there was material non-disclosure by Motsa when he took out the policy, and further ruled that because Motsa and his deceased wife were married in community of property, her lack of active separate contribution to the loan did not invalidate the claim, as the loan repayment from the joint estate constituted a contribution by both of them.
The ombudsman determined that it was unfair for ESRIC to refuse to accept the claim on the basis that the insured event had not occurred. ESRIC is challenging this decision on the grounds that the ombudsman allegedly applied the wrong law. ESRIC argued that the ombudsman incorrectly used marriage law principles (community of property) to decide an insurance law matter. ESRIC contended that insurance is a contract of utmost good faith where specific risks must be disclosed and assessed, and that the wife was never a disclosed party to the policy. In its application, ESRIC sought to stay the execution of an order issued by the ombudsman on November 11, 2025. The order in question upheld a complaint by Motsa and directed ESRIC to pay out the benefit claim.
According to the founding affidavit deposed by Sifiso Mpushana Dlamini, ESRIC’s Legal Services and Compliance Manager, the origins of the case date back to approximately the year 2000. Motsa, then an employee of SBS, entered into a mortgage loan agreement with the institution to finance the acquisition of a block of residential flats.
The agreement specified that the loan repayments would be serviced through rental income generated by the flats. Consequently, a Mortgage Protection Policy (MPP-2010-001) was taken out with ESRIC to cover the loan. ESRIC maintained that at the inception of the policy, Motsa was the sole named beneficiary and the only individual identified as the contributor to the premiums, which were deducted from the rental income.
On July 1, 2022, ESRIC received a claim from SBS for E667 301.68, representing the outstanding mortgage balance. The claim was triggered by the death of Motsa’s wife. ESRIC subsequently rejected the claim on two primary grounds: Non-disclosure of material facts and the assertion that the insured event had not occurred.
Following the rejection of the claim, Motsa filed a complaint with the Ombudsman of Financial Services. On November 11, 2025, the ombudsman ruled against ESRIC, finding that the corporation had failed to prove material non-disclosure.
Repayments
The ombudsman noted that Motsa and the deceased were married in community of property on April 27, 1981. The ruling suggested that because of the joint estate, the deceased was contextually a contributor to the loan repayments. The ombudsman ordered ESRIC to pay the benefit claim and further ordered SBS to refund Motsa E88 713.80 in insurance fees charged after the claim was lodged, with nine per cent interest per annum.
ESRIC’s application for review is based on the contention that the ombudsman applied incorrect legal principles. The corporation argued that the ombudsman erroneously relied on marriage law rather than insurance law. Sifiso stated in the affidavit that the ombudsman’s reliance on the community of property status was fatal to the decision. ESRIC contended that insurance contracts are bona fide agreements requiring individual risk assessment.
The corporation argued that Motsa’s wife was never disclosed as a joint debtor or a person to be covered under the policy. Had such a disclosure been made, according to ESRIC, she would have been required to undergo a pre-qualification risk assessment to allow the insurer to evaluate the risk it was assuming.
Event
ESRIC also argued that the insured event required to trigger the policy did not take place. The corporation submitted that a mortgage protection plan serves two purposes: Protecting the financial institution’s interest and protecting the insured’s estate.
“Since the loan was serviced by rental income from the property, which continued to be collected after the death of the spouse, the second respondent’s (Motsa) ability to service the loan remained unimpaired,” Sifiso submitted.
He argued that paying the claim would allow Motsa to benefit twice from the same event, as he would receive the loan clearance while continuing to collect personal rental income.
The application is supported by a certificate of urgency prepared by Mxolisi Dlamini of Dynasty Inc. Attorneys. The legal representative argued that the matter requires immediate judicial intervention because the ombudsman’s order is currently operational and subject to execution.
According to ESRIC, if the order is not stayed pending the review, Motsa may proceed to execute the judgment. The affidavit emphasised that the ruling was received on November 20, 2025, and subsequent internal consultations and legal evaluations were conducted promptly.
ESRIC maintained that it has strong prospects of success, as a proper application of insurance law principles would lead to the dismissal of the original complaint. The matter was argued before Judge Nkosinathi Maseko and it is awaiting judgment.