TCF claims its first major industry win
Is Treating Customers Fairly (TCF) having the desired effect the Financial Services Board (FSB) wants it to have on the industry? Judge Ronald McLaren, Ombudsman for Long-Term Insurance, believes that TCF is a contributing factor to the decrease in complaints sent to his office.
This was announced when the Ombudsman for Long-Term Insurance released its 2014 annual report which showed a significant decline in complaints received, as well as containment in the amount of claims settled wholly or partially in favour of the complainant.
Crunching the numbers
According to the 2014 Annual Report, the Ombud received 5 104 chargeable complaints. This is a significant reduction when one considers that the Ombud received 6 345 chargeable complaints in 2013.
Because of the reduction in complaints received, the Ombud also saw a reduction in the number of cases that were finalised. During the year, the Ombud finalised 3 822 cases opposed to the
4 496 cases which were finalised in 2013.
Some interesting complaints were received. Within the life sector, the majority of complaints (1 221 complaints in total) were a result of claims being declined where the policy terms and conditions were not recognised or met.
Within the disability sector, the majority of claims (289 complaints in total) were also a result of claims being declined where the policy terms and conditions were not recognised or met. This was also the case in the health sector where 414 complaints were received in this regard.
The Ombud was able to reclaim R147.1 million for complainants in the form of lump sum payouts. Compensation awarded to complainants amounted to R452 025.
Showing customer value
Dorea Ozrovech, Chairperson of the Ombudsman Committee, pointed out that this may be the result of the new referral process of complaints to subscribers, however it is possible that the planning and positioning for TCF also had a huge focus on complaints handling and all processes in the industry to provide a positive outcome for clients.
“The decisions made by the Ombudsman in favour of complainants also dropped to 29%. Most complaints at the Ombudsman’s office are still about claims that were declined due to contractual terms or non-disclosure. The industry will focus on internal processes to reduce the complaints about poor communication and poor service,” said Ozrovech.
There are a few trends which insurers are monitoring and around which they are formulating mitigation plans. Ozrovech pointed out that many insurers experienced a decrease in complaints, with great effort put into internal complaints processes. However, social media complaints were increasing with high expectations from clients for immediate feedback.
She adds that there is a continued trend of more complicated complaints and more persistent complainants demanding service to be rendered in shorter completion times. It remains a challenge for insurers to manage client expectations.
A good year for insurers
When reflecting on the year, Judge McLaren said that it was a good year for insurers. He pointed to the fact that 9 246 written requests for assistance were received, which represents a reduction of 8% over 2013. Complaints in which the complainants were wholly or partially successful stood at 29.7%, compared to 33% in 2013. There was however, an increase in the percentage of complicated cases to 18%, compared to 15.7% in 2013.
In last year’s Annual Report attention was drawn to trends that could have been responsible for the consistent increase in the number of complaints received during the past few years.
“Those trends, which are increased number of policies sold, increased public awareness of the office and the role of social media, remain unchanged, yet there was a decline in the number of complaints received. From experience, we know that accurate prediction of complaint volumes is impossible,” said Judge McLaren.
A new light for insurers
Apart from TCF, Judge McLaren pointed out that a new business model within the Ombud has also reduced the number of complaints within the industry.
The essence of the new business model is its requirement that any complaint not previously considered by a subscribing member will be forwarded to the subscribing member with a view to resolving the compalint. “The new business model was incrementally and successfully implemented during 2014 and by the end of the year it applied to all but two subscribing members,” said Judge McLaren.
The effects of this new model have been positive. The less complicated transfers were resolved by insurers, with the result that the majority of reviews and full cases which are dealt with by the office tend to be the more complex complaints.
Judge McLaren added that the inevitable consequence of the effect mentioned above is an increase in the time it takes to resolve those more complicated complaints.
Editor’s Thoughts:
There was a worry that TCF would cause unintentional challenges in the industry. However, if we go by the results presented by the Ombud, we can see that it is having a positive impact on the industry. The Office of the Short-Term Ombudsman is releasing their report next week, and it will be interesting to see if TCF is having a similar impact in this industry. Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts [email protected].
