A Lesotho judge has found that Alliance Insurance Company Ltd had no legal basis to withhold M470,000 from a beneficiary while police investigations into the death remained open.
Lesotho’s High Court has ruled against an insurance company that refused to pay out a death claim while waiting for police investigations to be completed, in a judgment that sets a clear precedent for how insurers must handle disputed claims in the country.
In the case of Karabo Ralebakeng vs Alliance Insurance Company Ltd, Judge A.R. Mathaba ordered the insurer to pay M470,000 to the plaintiff, who is the beneficiary of his late brother’s insurance policies.
Karabo Ralebakeng took the matter to court after Alliance Insurance Company Ltd delayed payment following the death of his brother, Linna Ralebakeng, in October 2018. The deceased had taken out several insurance policies, including four with the defendant.
After the claim was submitted, the insurer refused to process it immediately. Instead, it said it would wait for police investigations to be completed and for a suspect to be identified, arguing that the case raised “red flags.” The court found, however, that this position was not permitted under the terms of the insurance contract.
Judge Mathaba held that while an insurer has the right to verify a claim, it must do so within a reasonable time and cannot delay payment indefinitely while waiting for police investigations to conclude.
“The insurer must make its own assessment. The company has no control over how long police investigations may take.”
Judge A.R. Mathaba · High Court of Lesotho
The court also rejected the insurer’s argument that the deceased had failed to disclose other insurance policies held with different companies. Judge Mathaba held that this information was not material to assessing the risk and therefore did not affect the validity of the claim.
“The existence of other policies covering the same risk was not material.”
Judgment · Ralebakeng vs Alliance Insurance Company Ltd
In the final order, the court directed Alliance Insurance Company Ltd to pay M470,000 for the insurance claim, M1,000 for airtime costs as provided under the policy, interest at 10.5 per cent per year, and full legal costs.
The plaintiff was represented by Advocate M. Ntaote. Advocate K. Letuka appeared for the defendant.
The judgment makes clear that insurers in Lesotho cannot delay claims without proper legal grounds, and cannot rely on external investigations, including police inquiries, that may take an unknown or indefinite length of time to conclude. Legal observers say the ruling is significant for policyholders and beneficiaries across the country who have faced similar delays from insurance providers.
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