Insurance ombuds gave R400 million back to consumers, handled 18 000 complaints

The country’s two insurance ombuds resolved more than 18 000 complaints between them, and reimbursed consumers almost R400 million in the past financial year, with the Ombudsman for Long-term Insurance (OLTI) recovering R200 million, while the monetary benefit for consumers from the Ombudsman for Short-term Insurance (OSTI) amounted to R197 188 388.

These figures were part of the joint annual report for the insurance industry ombuds launched on Tuesday.

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Long-term insurance

According to the report, the office of the OLTI:

• received 17 379 written requests for help, exceeding the record of 14 198 set in 2020
• received 8 163 complaints chargeable to the insurer
• finalised 7 533 cases compared to 6 512 in 2020
• recovered R200.7 million for complainants in lump sums
• awarded an additional R948 592 as compensation for poor service
• finalised 91.9% of cases within 6 months

According to the OLTI, the increase in the number of complaints is largely due to the effects of the Covid-19 pandemic. Complaints regarding funeral and credit life benefits increased in line with the increase in deaths at the end of 2020 and in 2021 due to Covid-19, as well as an increase in retrenchments and loss of income claims due to the pandemic.

Most of these complaints were about funeral cover (45%), life cover (30%), credit life cover (11%), disability (8%) and health (6%). There was a decrease in the number of complaints about disability (2%) and health (2%) benefits.

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Short-term insurance

The office of the OSTI:

• received 13 162 complaints
• registered 9 797 new complaints, 11% less than last year
• received 250 of these complaints were related to Covid-19
• 197 of these were related to business interruption insurance
• 62 of these were related to travel insurance
• finalised 10 879 complaints, 0,7% more than in 2020
• recorded a monetary benefit and value for consumers of R197 188 388
• Covid-19-related complaints made up 2.6% of all registered complaints, compared to 7% the year before
• 31 complaints resulting from the civil unrest, looting and damage to infrastructure in KwaZulu-Natal and Gauteng in July 2021 were registered
• 23 of these complaints related to commercial lines and eight to personal lines insurance
• ended the year with 3 052 open complaints, compared to 4 210 in 2020, mainly due to the 7% increase in registered complaints in 2020 and the almost 12% decrease in registered complaints
• finalised 70% of complaints within 6 months.

A total of 43% of these complaints related to motor vehicle insurance disputes, followed by complaints about homeowners’ or building insurance at 22%. Commercial insurance complaints made up 14% and household contents insurance 6% of complaints. The remaining 15% relates to other types of cover and general policy queries.

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Accident-related complaints

Although accident-related complaints declined from 73% in 2020 to 65% in 2021, it remained the main type of complaint in this category, followed by complaints about warranty and mechanical breakdown claims which increased by 3% from 11% in 2020 to 14% in 2021 and theft and hijack claims which made up 7% of complaints.

The two previous annual reports already showed an upward trend in the number of complaints relating to accident claims rejected by insurers because the driver failed to exercise reasonable precautions or due care, usually because the driver was speeding.

OSTI considered 369 complaints about accident claims, rejected because the driver failed to exercise reasonable precautions or due care and overturned 47 rejections, such as instances where insurers relied on an inaccurate and/or incomplete report from an accident reconstruction specialist about the speed and how it contributed to the accident.

In 2021 OST resolved 16% of the total number of motor vehicle insurance disputes in favour consumers and consumers were paid back R34 879 844.54.

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Complaints about homeowners and household contents insurance

In the category of homeowners’ or building insurance disputes, 48% of the complaints related to claims for damage caused by acts of nature which were mainly storm-related.

The number of complaints about rejected claims due to defective construction and/or maintenance issues increased from 47% in 2020 to 53%.

In 2021, 10% of the matters OSTI considered on this issue were overturned by the office, while 11% of the total number of homeowners’ insurance disputes were resolved in favour of the consumers, who were paid R9 356 581.24.

In the category for household contents insurance disputes, complaints about theft and burglary claims made up 44% of complaints, a decline of 9%.

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Insuring appliances against loadshedding damage

With loadshedding rearing its ugly head again, it is not surprising that complaints about damage caused by power surges increased from 3% in 2018 to 6% in 2019, 11% in 2020 and 16% in the latest financial year.

OSTI recommends that consumers review their policy documents to ensure that they enjoy cover for damage caused by a power surge, as some household contents insurance policies do not include this cover, while other policies may only cover power surge damage for an additional premium if requested.

At the end of the year OSTI resolved 15% of the total number of household contents insurance disputes in favour of the consumers, with a recovery of R1 974 965.26.

After a huge surge in complaints during 2020 about commercial insurance due to Covid-19-related business interruption claims, 15% were finalised in 2020 and a further 27% in 2021 based on court decisions.

In 2021, 22% commercial insurance complaints were resolved in favour of the insureds and R134 846 032.30 was recovered.