Increased protection for consumers
Myra Knoesen, FAnews Journalist
In the years ahead as legislative changes impact on the industry it is expected that consumer protection will strengthen and consumer confidence will increase. Insurers already appear to be paying more attention to servicing their policyholders and their complaints.
Dispute management
In maintaining fairness in the industry the Ombudsman for Long-term Insurance (OLTI) gives guidance to the industry on the interpretation of certain legislation with the objective to ensure that complaints are handled effectively and with fair outcomes to complainants.
When looking at last year’s report, notably for the second year in a row, there were slightly fewer chargeable complaints received by the Ombudsman’s office during 2015.The office of the OLTI recovered R184 million in the form of lump sums for consumers from long-term insurers during 2015 and complainants received more than R527 666 in compensation for poor service. These amounts do not include income benefits, annuity payments and the value of non-monetary benefits.
Requests for assistance
At the release of its annual report for 2015, Long-term Insurance Ombudsman, Ron McLaren said it had received 9 815 written requests for assistance in 2015. This is 6% more than in 2014, but 2% less than in 2013.
The timing of the requests was also interesting as 2 659 were received in the final quarter of the year, compared to 2 156 the previous year.
Of the requests received, 5 018 were chargeable cases, 86 fewer than the previous year - with 3 491 cases full cases finalised and 75% of cases finalised within six months of receiving them. Almost 30% of the cases were resolved in favour of the complainant, slightly up on 2014’s 29.7%.
Looking closer, 2 043 were full cases (complaints already seen by insurers and handled by the Office from inception to finality), 2 753 were transfers (cases not previously seen by insurers) and 222 were mini cases (simple complaints that are within the jurisdiction of the office, but which insurers can more readily handle at source).
Transfers increased by 7%, full cases decreased by 12% as the Ombudsman encouraged complainants to first try to resolve their complaint directly with their insurer.
A slightly different trend
In standard cases, the Office’s benchmark, declined marginally with 2 630 cases finalised, but still makes up 75% of the closures. Included here are the full cases received by the Office, as well as the transfers that have been returned to the Office as reviews.
For incompetent cases there was a 46% reduction with 120 cases finalised - the lowest number on record. The number of cases in the complicated categories, taken together, reduced marginally.
There was a reduction in basic cases at 130 finalised cases which is probably due to the implementation of the new business model across the board.
Nature of complaints
The nature of complaints followed a similar trend to the previous year, with claims declined by long-term insurers comprising the lion’s share at 55% of the total complaints submitted.
The types of long-term insurance products most consumers complained about were funeral cover (35% of complaints) and life cover (31%). Complaints in the health category decreased for the third consecutive year to 14% as a result of fewer complaints about hospital cash plans. Credit Life and disability claims remained the same from 2014 at 10%.
McLaren noted that there had been a steady increase in the number of unreasonable complainants and in the number of complex complaints against long-term insurers.
“Some complainants claim to be seeking ‘justice’ or ‘a moral outcome’ but tend to display unreasonable arguments, behaviour, demands and persistence as well as unwillingness to co-operate,” says McLaren.
Complaints about poor communication, historically the second largest category of complaints however, showed an annual decrease.
“It is promising that insurers seem to have worked hard to communicate more clearly with their clients about policy terms and conditions,” says McLaren. “Good progress has been made on complying with Treating Customers Fairly (TCF) principles too.”
“Judging by the number of complaints so far this year we expect a similar year. We received 3 002 complaints up to the end of April, the figure was 3 130 in 2015 for the same period,” says McLaren.
McLaren says that if products improve there could be less cause for complaints and that could impact on the statistics in the office, but that would apply to all forms of long-term insurance not only funeral and life cover.
Editor’s Thoughts:
McLaren says it is possible that as consumers become more aware of their rights that complaints will increase. However, he says this could be countered by a more strictly regulated industry. Do you think this is a cause for concern particularly when we look at the harsh penalties for non-compliance within the industry?Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts [email protected].
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