Authored By: MANELISI DLAMINI
North West University
Introduction
The recent 2025 refusal by Icebolethu Group to honor a funeral policy claim following the death of Mr. Sbonelo Zaca during a police shootout in KwaZulu Natal has reignited an important legal debate concerning the limits of insurance exclusions and the rights of beneficiaries. According to the insurer’s public statement, the claim was rejected on the basis that the deceased was allegedly involved in criminal activities at the time of his death. The decision has generated significant public controversy, particularly because funeral insurance is intended primarily to benefit surviving family members rather than the deceased himself.
South African life insurance law has long recognised the principle that no person should benefit from his or her own wrongful conduct. This principle, rooted in the common-law maxim ex turpi causa non oritur actio (“no action arises from a dishonourable cause”), has traditionally justified the exclusion of insurance benefits arising from intentional criminal acts. Insurers frequently rely on this principle, together with policy exclusion clauses, to repudiate claims where the insured dies while allegedly participating in criminal activity. Although public policy seeks to prevent wrongdoers from profiting from unlawful conduct, life and funeral insurance benefits are generally not paid to the deceased. Rather, they are paid to nominated beneficiaries, dependents, spouses, children, or estates. This distinction raises the question of whether denying insurance benefits truly prevents the wrongdoer from benefiting, or whether it instead punishes innocent third parties who were not involved in any criminal conduct.
This article argues that the current application of criminal conduct exclusions in life insurance law is overly broad and insufficiently attentive to constitutional principles, the presumption of innocence, the doctrine of causation, and the beneficiary-centred nature of life insurance contracts. It further argues that South Africa requires legislative reform to provide greater certainty regarding when criminal conduct may legitimately justify the refusal of life insurance benefit.
Legal Framework Governing Funeral Insurance Claims and The Legal Nature and Purpose of Life Insurance
2.1.1 Freedom of Contract and Insurance Law
South African insurance law is founded upon the principle of freedom of contract. Insurers and policyholders are generally free to determine the terms and conditions of their insurance agreements. This principle allows insurers to define the risks they are willing to cover and to exclude particular risks through policy wording. The Insurance Act 18 of 2017, together with the Financial Sector Regulation Act 9 of 2017, provides the regulatory framework within which insurers operate. Insurers must comply with prudential requirements and Policyholder Protection Rules issued by the Financial Sector Conduct Authority (FSCA). These laws seek to balance consumer protection with the financial stability of insurers.
However, contractual freedom is not absolute. South African courts have consistently held that contractual provisions must be consistent with public policy and constitutional values. In Barkhuizen v Napier 2007 (5) SA 323 (CC), the Constitutional Court held that contractual clauses remain enforceable only insofar as they are reasonable and consistent with public policy, which is now informed by the Constitution.
2.1.2 Material Non-Disclosure and Misrepresentation
Sections 59 of the Long-term Insurance Act 52 of 1998 and 53 of the Short-term Insurance Act 53 of 1998 permit insurers to repudiate claims where there has been material misrepresentation or non-disclosure. The test is objective. Information is material only if a reasonable and prudent person would regard it as relevant to the insurer’s assessment of risk. Importantly, these statutory provisions relate to conduct occurring during the formation of the contract. They do not automatically authorise an insurer to refuse benefits merely because the insured subsequently became involved in criminal activity.
2.1.3 Criminal Conduct Exclusions
Unlike misrepresentation and suicide provisions, there is no statutory provision in South African legislation expressly authorising insurers to reject claims arising from criminal conduct. The exclusion derives primarily from common law principles, particularly: ex turpi causa non oritur actio (no action arises from a disgraceful cause);the principle that no person may benefit from his own wrongdoing; public policy considerations; and The requirement that insured events must generally be fortuitous rather than intentionally caused. Consequently, the criminal conduct exclusion is largely judge-made law rather than a legislative rule.
2.2.1Life insurance is fundamentally different from indemnity insurance.
Whereas indemnity insurance compensates a policyholder for a loss suffered, life insurance creates a contractual obligation upon the insurer to pay a predetermined benefit upon the occurrence of an event, namely death. The primary purpose of life insurance is the financial protection of dependents and beneficiaries after the death of the insured. In many instances, the policyholder pays premiums for decades specifically to ensure that surviving family members are financially secure after death.
The Constitutional Court has repeatedly recognised the social importance of contractual arrangements that provide financial security and promote human dignity. ¹ Consequently, life insurance performs an important social and economic function within South African society. Where the insured dies, the benefit ordinarily vests in beneficiaries who possess independent legal rights under the policy. The proceeds are therefore not intended to enrich the deceased but rather to support surviving family members.
3 The Common-Law Foundation of Criminal Conduct Exclusions
3.1 Public Policy and Wrongdoing
South African insurance law does not contain an express statutory provision excluding all claims arising from criminal conduct. Instead, the exclusion originates primarily from common law. The traditional justification is based upon the principle that courts should not assist a person seeking to profit from his or her own wrongdoing. In Ex parte Minister of Justice: In re MacIntosh v King 1940 AD 269, the Appellate Division recognised the broader public policy principle that the law should not permit an individual to derive benefits from unlawful conduct. Similarly, in Sasfin (Pty) Ltd v Beukes 1989 (1) SA 1 (A), the court confirmed that agreements contrary to public policy are unenforceable. These authorities continue to influence insurance law and have been relied upon to justify exclusions relating to intentional criminal conduct.
The Requirement of Fortuity Insurance law traditionally requires that an insured event be fortuitous. Professor JP Van Niekerk explains that insurance is designed to protect against uncertain risks and unforeseen losses rather than losses intentionally caused by the insured.This principle is reflected in decisions such as Dafel v Acacia Insurance Co Ltd 2001 (2) All SA 327 (C), where the court recognised that deliberate conduct resulting in loss falls outside the fundamental purpose of insurance.
However, while this rationale may justify refusing benefits where the insured intentionally causes the insured event, its application becomes less straightforward when the insured dies and the benefit becomes payable exclusively to innocent beneficiaries.
4Legal Foundations of the Public Policy Defence in Insurance Claims
4.1Public Policy and Wrongful Conduct South African courts have long recognised that contracts contrary to public policy should not be enforced.
In Sasfin (Pty) Ltd v Beukes 1989 (1) SA 1 (A), the Appellate Division held that agreements contrary to public policy are unenforceable. Similarly, in Ex parte Minister of Justice: In re MacIntosh v King 1940 AD 269, the court affirmed that the law does not permit a person to profit from unlawful conduct. These authorities provide the foundation upon which insurers rely when refusing claims connected to criminal activities. However, neither case concerned funeral insurance or the rights of innocent beneficiaries.
4.2 Insurance and Intentional Wrongdoing.
The distinction between accidental and intentional loss is fundamental in insurance law.In Dafel v Acacia Insurance Co Ltd 2001 (2) All SA 327 (C), the court recognised that insurers are generally entitled to reject claims where the insured intentionally causes the loss.The rationale is straightforward: insurance exists to transfer unforeseen risks rather than to indemnify deliberate wrongdoing. Yet this principle becomes less convincing where funeral cover is concerned. The deceased does not receive the benefit. The benefit accrues to surviving relatives responsible for funeral expenses.
4.3 Constitutional Limits on Exclusion Clauses
The Constitutional Court in Barkhuizen v Napier emphasised that public policy is now rooted in constitutional values including fairness, dignity and reasonableness. A clause that operates harshly against vulnerable beneficiaries may therefore warrant closer scrutiny. Funeral insurance occupies a unique social function in South Africa. It is frequently purchased by low-income earners specifically to protect family members from the financial burden of burial costs. A contractual provision that deprives innocent beneficiaries of funeral benefits may undermine the constitutional values of dignity and social solidarity that funeral insurance is intended to serve.
5The Constitutional Presumption of Innocence
5.1 Allegation Is Not Conviction
One of the most significant legal difficulties arising from criminal conduct exclusions is that insurers frequently rely upon police reports, investigative findings, media reports, or allegations of criminal participation. A fundamental weakness in many criminal conduct exclusions is the reliance on allegations rather than proven criminal guilt.
Section 35(3)(h) of the Constitution guarantees every accused person the right to be presumed innocent until proven guilty. Police reports, investigative reports and media reports do not constitute proof of criminal guilt. They merely provide allegations requiring judicial determination. Where an insurer relies solely on a police report indicating that the deceased was allegedly involved in criminal activity, the insurer effectively assumes the role of a criminal court. This creates a significant legal difficulty because criminal guilt can only be established through due process before a competent court. Where a deceased person dies before trial, no criminal conviction is possible. Consequently, any conclusion regarding criminal guilt remains speculative.
A police report does not constitute proof of criminal guilt. It merely records allegations and investigative findings. Similarly, an investigating officer’s opinion does not constitute a judicial determination. Where an insured dies before criminal proceedings are concluded, no criminal conviction can be obtained. Consequently, any conclusion regarding criminal guilt remains legally untested. The refusal of life insurance benefits based on allegations alone effectively permits insurers to substitute their own determination for that of a court of law.This raises serious constitutional concerns.
5.2 The Evidentiary Problem
The Icebolethu statement relied upon official reports indicating alleged participation in criminal conduct. However, allegations are inherently different from proven facts . A police report may establish suspicion. It does not establish guilt beyond reasonable doubt. If insurers are permitted to deny claims based merely on allegations, beneficiaries may lose valuable contractual rights without any judicial determination of wrongdoing. Such an approach risks violating principles of procedural fairness and legal certainty.
5.2 Procedural Fairness
The Constitution requires that legal determinations affecting rights be made fairly and rationally. When insurers rely exclusively on police reports to deny claims, beneficiaries are effectively deprived of contractual rights without any judicial process. Such an may be inconsist approach ent with constitutional values of fairness, accountability, and access to justice. The constitutional principle of legality requires that decisions affecting rights be based upon reliable and objectively verifiable evidence rather than mere suspicion.
6The Beneficiary-Centred Nature of Funeral Insurance
6.1 Funeral Benefits Are Not Paid to the Deceased.
A critical distinction exists between life insurance and funeral insurance. The purpose of funeral insurance is to fund burial expenses incurred by surviving relatives. The deceased receives no benefit because legal personality terminates upon death. Under South African law, legal personality begins at birth and ends upon death. A person dies, he or she can no longer possess rights or receive benefits. Consequently, funeral insurance proceeds are intended for beneficiaries rather than the deceased.
6.2 No Benefit Flows to the Wrongdoer
The common-law principle that a person should not benefit from his own wrongdoing loses force where the benefit is paid to innocent third parties. The beneficiaries did not participate in the alleged criminal conduct. They remain financially responsible for funeral arrangements regardless of how death occurred.
6.3 The Requirement of Causation
South African law generally requires a causal connection between wrongdoing and the loss suffered. The National Financial Ombud Scheme has repeatedly recognised that insurers cannot rely upon broad public policy arguments unless the alleged misconduct is materially connected to the insured event. A criminal act should therefore justify repudiation only where it constitutes the proximate cause of the claim. Even then, the insurer should demonstrate that the exclusion clearly appears in the policy of wording and that the causal link is established on credible evidence.
7Critical Evaluation of Current Law
7.1.1 Absence of Legislative Clarity
One of the greatest weaknesses in the current legal framework is the absence of explicit statutory regulation governing criminal conduct exclusions.
Unlike suicide exclusions, which are specifically recognised by legislation, criminal conduct exclusions derive largely from common law and industry practice.
7.1.2This creates uncertainty regarding:
the standard of proof required; the meaning of criminal participation; the rights of beneficiaries; the role of allegations versus convictions; and the extent of causal connection required. Legal certainty demands clearer legislative guidance.
7.2Constitutional Concerns
A refusal based solely on alleged criminal conduct raises constitutional concerns. The Constitution protects, human dignity; equality; access to courts; procedural fairness; and the presumption of innocence.
Where a funeral insurer relies exclusively on allegations rather than convictions, these constitutional values may be undermined. The decision effectively labels the deceased criminal without judicial process.
7.3 Socio-Economic Impact
Funeral insurance plays a significant socio-economic role in South Africa. For many families, funeral cover represents the only available financial resource following a death. The denial of benefits often leaves grieving families unable to meet burial expenses. broad criminal conduct exclusions may produce severe social consequences that extend beyond the deceased’s alleged actions.
Legislative Framework and the Absence of an Express Criminal Conduct Exclusion
A significant weakness in the current legal framework governing life and funeral insurance is the absence of an explicit statutory provision authorising insurers to repudiate claims solely because the deceased allegedly participated in criminal activity. While insurers frequently rely on common-law principles and policy exclusions to justify repudiation, neither the Insurance Act 18 of 2017 nor the Financial Sector Regulation Act 9 of 2017 expressly provides for a general criminal-conduct exclusion.
The Insurance Act establishes the prudential framework within which insurers operate and seeks to ensure the financial soundness and stability of insurance institutions. Likewise, the Financial Sector Regulation Act promotes consumer protection, fair treatment of policyholders, and effective market conduct regulation through the Financial Sector Conduct Authority (FSCA). Neither statute expressly permits insurers to deny claims merely because an insured person died while allegedly involved in unlawful conduct.
The absence of legislative codification becomes even more apparent when one considers the treatment of misrepresentation and non-disclosure in South African insurance law. Section 59 of the Long-term Insurance Act 52 of 1998 provides that a life insurer may not invalidate a policy or reject a claim unless the alleged misrepresentation or non-disclosure was material to the insurer’s assessment of the risk. Similarly, section 53 of the Short-term Insurance Act 53 of 1998 requires that the non-disclosed information must have materially affected the insurer’s evaluation of the risk before a claim may be repudiated.
8Legal Reform Proposed
8.1 Legislative Codification Parliament should enact legislation expressly regulating criminal conduct exclusions.
The legislation should clearly define:
what constitutes criminal conduct; the standard of proof required; the rights of beneficiaries; the evidentiary requirements; and the circumstances under which claims may be refused. Such codification would enhance legal certainty and transparency.
8.2 Requirement of Judicial Determination
Insurers should not rely solely on police reports or investigative findings. A criminal conduct exclusion should apply only where: the conduct has been established by a court of law; or overwhelming objective evidence demonstrates the commission of a serious offence. This approach would better protect constitutional rights and the presumption of innocence.
8.3 Protection of Innocent Beneficiaries
Legislators should distinguish between funeral insurance and ordinary life insurance. Where innocent beneficiaries bear funeral expenses, the law should favour payment unless the beneficiaries themselves participated in the wrongdoing. This would preserve the social purpose of funeral insurance while preventing wrongdoers from profiting from unlawful conduct.
Unlike suicide exclusions, which are expressly regulated through legislation and policy provisions, criminal conduct exclusions remain largely dependent upon common-law principles.
This creates uncertainty concerning:
the required standard of proof; the role of criminal convictions; beneficiary rights; causation requirements; and constitutional limitations.
Legislative reform should provide:
9.1 Conviction -Based Standard
Claims should not be repudiated solely on the basis of allegations. A criminal conviction should ordinarily be required before a criminal conduct of exclusion may be invoked.
9.2 Protection of Innocent Beneficiaries
Where beneficiaries neither participated nor encouraged the criminal conduct, the law should favour payment.
9.3 Express Statutory Guidelines
Parliament should enact detailed provisions defining:
criminal conduct exclusions;
evidentiary standards;
causation requirements; and
procedural safeguards.
Such reforms would promote legal certainty and consumer protection.
Conclusion
The refusal of life or funeral insurance benefits based solely on alleged criminal conduct raises significant legal and constitutional concerns. While South African common law correctly recognises the principle that no person should benefit from their own , both life and funeral insurance differ from other forms of insurance because the benefits are primarily intended for innocent beneficiaries and surviving relatives rather wrongdoing than the deceased. These forms of insurance serve important social purposes by providing financial security, preserving dignity in death, and alleviating the financial burden placed on families after a loss.
The current reliance on broad common-law public policy principles grants insurers considerable discretion in applying criminal conduct exclusions, despite the absence of a clear statutory framework regulating such exclusions. Dependence on police reports, investigations, or allegations rather than judicial findings of guilt risks undermining the constitutional presumption of innocence, procedural fairness, and the rights of beneficiaries. Public policy should not be applied in a manner that unjustly deprives innocent dependants of benefits for which premiums were lawfully paid.
A constitutionally compliant approach requires a careful balance between preventing abuse of insurance contracts and protecting the legitimate interests of beneficiaries. Legislative intervention is therefore necessary to provide clear regulation of criminal conduct exclusions, establish stronger evidentiary standards, and introduce appropriate procedural safeguards. Such reforms would promote legal certainty, uphold constitutional values, and ensure that life and funeral insurance continue to fulfil their essential purpose of providing financial protection and support to families in times of bereavement.
Bibliography
Cases
Barkhuizen v Napier 2007 (5) SA 323 (CC)
Dafel v Acacia Insurance Co Ltd 2001 (2) All SA 327 (C)
Ex parte Minister of Justice: In re MacIntosh v King 1940 AD 269
Sasfin (Pty) Ltd v Beukes 1989 (1) SA 1 (A)
Sea Harvest Corporation (Pty) Ltd v Duncan Dock Cold Storage (Pty) Ltd 2000 (1) SA 827 (SCA)
Books
Heaton J The South African Law of Persons 6 ed (2023)
Van Niekerk JP The South African Law of Insurance (LexisNexis, latest edition)
Hahlo HR & Kahn E The South African Legal System and Its Background (1968); see also principles of the South African Law of Persons regarding commencement and termination of legal personality
Legislation
Constitution of the Republic of South Africa, 1996
Financial Sector Regulation Act 9 of 2017
Insurance Act 18 of 2017
Long-term Insurance Act 52 of 1998
Short-term Insurance Act 53 of 1998
