Insurance ombudsman get more than R300 million back for clients

The insurance ombudsmen for long and short term insurance recovered millions of rand on behalf of consumers in 2022, with the ombudsman for long-term insurance recovering R220 836 922 and the ombudsman for short-term insurance R109 439 635.

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Ombudsman for short-term insurance

The ombudsman for short term insurance received 15 228 complaints in 2022, and complaints about motor insurance again made up most of the complaints with 4 446 (16.28%) and R39 642 212.59 finding its way back to consumers.

At 65.1%, accident-related claims were the highest number of complaints and the primary reason for these complaints was claims rejected due to policy exclusion, while 364 were dealt with on the ‘prevention of loss/due care’ rejection clause.

Homeowners’ insurance added 2 422 (13.75%) complaints and consumers got R16 682 769.63 back. The highest number of complaints were about acts of nature, at 45.1%, with 10.9% about the floods in KwaZulu-Natal.

The primary cause for complaints under this category was the rejection of claims on the basis of gradual deterioration, a lack of maintenance, or wear and tear, at 905 complaints.

Other short-term insurance complaints added 1 516 complaints and consumers got R5 821 705.36 back. The highest number of complaints were about theft or robbery of mobile devices, at 27.9%.

The primary cause for these complaints were the rejection of claims based on an exclusion in the policy, at 226 complaints, with the majority based on the ‘prevention of loss or due care’ exclusion.

Another 610 (16.23%) of the complaints were about household contents and consumers got R3 459 457.14 back.

At 40%, complaints about theft or burglary were the highest number of complaints closed in this category, while power surges made up 20%.

The main reason for complaints under this category was claims rejected on the basis of an exclusion in the policy, at 166, with the majority on the exclusions relating to gradual deterioration, a lack of maintenance or wear and tear, at 84 complaints.

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Commercial insurance

Commercial insurance added 1 417 (15,3%) complaints and businesses got R43 833 490.16 back. The highest number of complaints were about motor vehicle claims at 26.8%, a significant increase from 2021, when it was at 19%.

There is also a noted change in trends compared to 2021, when the highest number of complaints were Covid-19 related business interruption complaints at 26.5%, which declined significantly to 5.1% this year.

The primary cause of the complaints was the application of a policy exclusion, mainly the exclusion of gradual deterioration, a lack of maintenance or wear and tear, at 195 complaints.

The ombudsman also had to handle complaints about Sasria related to the wave of widespread civil riots and looting occurred in South Africa in July 2021, resulting in claims lodged under the South African Special Risks Insurance Association (Sasria) insurance cover.

In 2022, when compared to 2021, there was a significant increase in the number of these complaints under commercial insurance. Here the highest number of complaints related to commercial insurance disputes, at 53 complaints, followed by household contents insurance, motor vehicle and homeowners’ insurance.

The floods in KwaZulu-Natal in April 2022 also gave rise to many claims. The highest number of claims were about homeowners’ insurance (263), followed by commercial insurance (37), motor vehicle insurance (19) and household contents insurance (15).

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Ombudsman for long-term insurance

The amount of compensation the ombudsman for long-term insurance awarded to complainants due to poor service amounted to R857 544 in 203 complaints, less than the previous year’s R948 592 in 195 complaints.

The ombudsman received 16 476 complaints and 29% were resolved wholly or partially in favour of complainants.

Declined claims are still the biggest cause of complaints, making up 45% of the total number, while lapsing remains a concerning cause of complaints as some policyholders still experienced the after-effect of the Covid-19 pandemic on their financial situation and were unable to pay their premiums.

Complaints about funeral insurance again increased and has been a marked trend over the past two years.

Unsurprisingly, the percentage of credit life complaints returned to pre-COVID levels. Complaints about funeral insurance made up 48% of complaints, life insurance 31%, credit life insurance 8%, disability insurance 8% and health insurance by 5%.

People complained about insurance risk claims (56.6%), service to policy holders (19.5%), information provided to policyholders (10.1%), design of policy or related service (6%), complaints handling (2.7%) and policy performance (2.7%).