Consumers celebrate as insurance ombudsman rules in their favour
The 28 staff members at the office of the Ombudsman for Long-term Insurance had their work cut out for them last year. According to the 2008 Annual Report the office received 8 290 complaints, a 4.6% increase over 2007. Of the 2008 cases, 4 284 full cases were finalised, with 44% of all complaints resolved wholly or partially in favour of the complainant.
Ombudsman, Judge Brian Galgut ascribes the larger case load to the prevailing economic conditions. He observes that “there is little doubt that the increase was driven by financial factors – steep increases in interest rates since mid-2006 with a corresponding increase in household inflation, both having a lead time of a year or two to materialise into complaints; and the financial market collapse in 2008, the impact of which on complaints volume will doubtless be seen shortly.”
Behind the scenes, Ombudsman’s Council and Committee
What many readers don’t realise is the extent of ‘behind the scenes’ action that takes place around the office. An independent body known as the Ombudsman’s Council was established in 1999 with the “specific purpose of monitoring the independence and performance of the office of the Ombudsman. The Council consists of a maximum of 10 members.
“The Council’s mandate, contained in its constitution, is to facilitate the provision by the office of the Ombudsman of independent, equitable, speedy and cost-effective resolution of disputes,” says Council chairperson, Dawn Mokhobo. The Council’s big impact decision in 2008 was to amend the Rules to allow the Ombudsman to publish details of all determinations made against subscribing members, including the member’s identity. “The Council considered that this relaxation of the Rules’ confidentiality provisions is necessary in the light of the international trend towards greater transparency.” We’re sure most stakeholders (perhaps with the exception of insurers) welcomed the decision.
There is also an Ombudsman’s Committee made up of a nominee from each subscribing long-term insurance member that seeks to be represented on it. The Committee meets twice each year. According to Alan Woolfson, chairperson of the Ombudsman’s Committee, the feedback from these sessions is invaluable. He notes that “even though 44% of complaints were resolved wholly or partially in favour of the complainant, the feedback from all the life companies … was that there continue to be excellent standards and an outstanding level of professionalism in the office.”
Ratio of successful complaints too high
The challenge in the long-term complaints resolution space is to reduce the number of complaints that should be settled in-house by the insurer. The Ombudsman’s Committee has made some headway in this regard following their decision to furnish statistics at their twice annual meeting with subscribing members. “In 2008 there was a welcome decrease in cases marked by the office as incompetent, designated as such when an insurer’s response is late or inadequate.” But more needs to be done. In an interview on 702 Talk Radio Galgut told listeners the international benchmark for cases resolved in favour of complainants was closer to the 35% mark! Product providers in the long-term insurance industry have their work cut out to catch up. We’ve always felt that a ‘name and shame’ approach would quickly clean up both short and long-term insurance complaint resolution environments. Just imagine if prospective insurance clients could peruse the list (with reasons) of the insurers behind the 44% of upheld complaints mentioned earlier.
The industry would clean up its act in record time! Unfortunately, much like the Ombudsman for Short-term Insurance, the Long-term Ombudsman’s hands are tied in this regard. “The office’s Rule 1.2.5 requires the Ombudsman to maintain confidentiality in respect of every complaint received,” says Galgut.
Editor’s thoughts:
The Ombudsman for Long-term Insurance 2008 Annual Report confirms that complainants in the insurance industry need plenty of patience. The fact that 87% of cases are resolved within six months wouldn’t be mentioned in a positive light in any other industry. What can financial intermediaries and long-term insurance consumers do to avoid the complaints process? Add your comments below, or send them to gareth@fanews.co.za
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