We aren't industry lackeys

Confidentiality ensures a good relationship, says the ombudsman for long term insurance Mr Justice Peet Nienaber, reporting on his offices results for the year.

He also states that a total of 8985 complaints were received, of which 5470 cases were finalised.

As a starting point it is a misconception that the members of the ombudsman office are appointed by either the LOA or the FSB this is an independent office, and they are definitely not regulators.

Added to which the decisions or rulings handed down to insurers are binding on insurers and there is no appeals process. Consumers on the other hand can take the matter further via other legal means.

The office has fiercely protected its independence for the past two decades, and currently represents 98% of the long term insurers operating in South Africa, on a voluntary basis.

Nienaber says that they arent regulators: we criticise where we see things that are wrong. We are not consumer champions. We stand between the complainant and the consumer, looking for a fair solution to a problem.

Turning back to the report - the geographic spread of complaints was evenly spread with 28% coming from Gauteng, 17% from KZN, 16% from the Western Cape and 12% from the Eastern Cape the remainder from the rest of the country.

It also appears that the nature of the complaints has changed somewhat over the past two years. 2004 and 2005 saw more cases referring to claims declined, or policy terms not met. Nienaber also says that their success rate also appears to be increasing and is currently pegged 42% in favour of the complainants.

As a matter of interest there is no upper limit on the amount that the office can recover from their subscribing members. Also the office doesnt disclose the total rand amounts involved.

He also mentioned that the industry furore around the deduction of costs on early termination of policies with investment components, had pulled his office into the debate as consumers lodged complaints. Added to which the question was also raised about jurisdiction and whether the PFA had sole jurisdiction.

Nienaber says that the two offices had reached an understanding: The PFA would deal with complaints where it involved insurers who had issued policies to pension funds exclusively.

The issue gets interesting when there was an appeal against a ruling. There are court cases underway and the jurisdictional line is yet to be determined. There is no general principle yet.

He also explained that there was a basic difference between the PFA and the ombudsman's office. The PFA focuses on whether all costs were fully disclosed while the ombudsman focuses on whether these deductions are fully provided for in the policy.

And to further clarify Nienaber futher statedthat the Statement of Intent signed by National Treasury, the FSB and the LOA, does not apply to the majority of thecases before his office. The SOI does not assist them as an office, as it excludes endowments in terms of retrospective payments.

These matters may come up in pending appeals and the office has adopted a wait and see attitude.

If you want to see the full annual report, go to http://www.ombud.co.za/

Note:
The next edition of FA News in June will carry an in-depth review of the ombudsman's annual report.