Record number of short-term insurance complaints

The Ombudsman Short-Term Insurance received a record number of complaints against short-term insurers and returned more than R116m to consumers in 2014.

Speaking at the release of the office’s 2014 annual results, Ombudsman Dennis Jooste said 10 253 complaints against short-term insurers, such as car and household insurers were received, an increase of 9.5 per cent over the prior year.

The highest numbers of complaints were related to motor insurance (46,9 per cent); houseowner’s policies (20,9 per cent); householder’s cover (8,2 per cent) and commercial insurance (6,6 per cent).

“There’s no doubt that consumers are under economic stress and in this type of environment file more complaints against insurers,” said Jooste.

However, the number of complaints received by the office per 1 000 claims received by insurers, had remained a constant three complaints for every 1 000 claims submitted to insurers during 2014, said Jooste.

Furthermore, complaints resolved with some additional benefit to the consumer reduced to 31% of total complaints, showing a continuing decline over the past few years. In relation to the decline in what is known as the overturn ratio, it was interesting to note that the Ombudsman for Long-term Insurance last week reported a similar trend.

Initiatives such as insurers implementing Treating Customers Fairly principles and the publication of insurer statistics identifying insurers who attract a disproportionate number of complaints probably also had a positive impact on the way insurers deal with complaints from their customers.

Despite the increase in the number of complaints, the average turnaround time – the period taken to resolve a dispute was reduced to 89 days – a pleasing declining trend. Complaints unresolved after six months totaled only 54 at year end.

An Appeal Mechanism, which became effective in 2013, to enable insurers and consumers dissatisfied with a Final Ruling made by the Ombudsman to seek redress from an Appeal Tribunal, had not been used at all.

“The Appeal Mechanism has been widely publicised and the lack of use of the facility hopefully reflects a high level of acceptance of rulings made by the office,’ said Jooste.

Jooste added that the Ombudsman had worked with other Ombud schemes in the financial sector to comment on the second draft of the Financial Sector Regulation Bill, which was published in December 2014. The Bill is likely to be placed before parliament during 2015 and contains important amendments to the way voluntary Ombud Schemes will operate in future. This includes additional oversight by the regulatory authority, but Jooste said the legislation would not affect the independence of the Ombudsman.

During 2014, the terms of reference of the Short-Term Insurance Ombudsman were changed, with jurisdiction to deal immediately with a complaint rather than enquire whether the complainant had tried unsuccessfully to resolve a dispute through he insurer first.

“There were no serious objections to these amendments from the industry,” he added.

Jooste said the office of the Ombudsman would continue to focus on its primary function which was to resolve consumer complaints informally by applying the law and equity where appropriate.

Want to receive news alerts via WhatsApp? Send us an SMS/ WhatsApp message with your name and cellphone number to 079 414 6709. 

Familiarise yourself with our WhatsApp service disclaimer.

Do you perhaps have more information pertaining to this story? Email us at roodepoortrecord@caxton.co.za (remember to include your contact details) or phone us on 011 955 1130.

For free daily local news on the West Rand, also visit our sister newspaper websites Randfontein Herald, Krugersdorp News and Get It Joburg West Magazine

Remember to visit our Facebook, Twitter and Instagram pages to let your voice be heard!