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New short-term ombudsman will meet challenges head on

22 February 2012 Gareth Stokes
Gareth Stokes, FAnews Online Editor

Gareth Stokes, FAnews Online Editor

The Office of the Ombudsman for Short-term Insurance (OSTI) was established in August 1989 to offer insurance consumers a free, efficient and fair dispute resolution mechanism. The number of complaints registered at the Office has escalated in recent year

In November 2011 the board of the Ombudsman for Short-term Insurance indicated that Brian Martin’s five-year contract would not be extended beyond 31 December and that Dennis Jooste would take over as Ombudsman from 1 January 2012. Jooste has a strong legal background thanks to an accomplished career as the managing partner at Bowman Gilfillan Incorporated Attorneys. He also gained substantial experience in dispute resolution as a Fellow of the South African Association of Arbitrators and was ranked as the number one dispute resolution attorney in South Africa by The Practical Law Company in 2008. Nine weeks into the New Year, on 16 February 2012, FAnews joined various short-term industry stakeholders to officially welcome the new Ombudsman at a cocktail function in Johannesburg.

Setting the record straight...

After a brief welcome to fellow Ombuds in attendance – the Long-term Ombudsman Judge Brian Galgut, Credit Ombudsman Manie van Schalkwyk, and acting Pension Funds Adjudicator Dr Elmarie de la Rey – Jooste used the platform to clear the air. “In my short time in Office, I got the impression that there is a misunderstanding as to what the main role of the Ombudsman is,” he said. “First and foremost we are part of the alternative dispute resolution movement!” The Office exists as an independent dispute resolution mechanism between short-term insurers on the one hand, and consumers on the other. Jooste was at pains to point out that the OSTI was not a spokesperson for either the insurance industry or consumer activist bodies. “We value the input of both parties, but we are absolutely neutral and intend to remain so,” he said.

The OSTI function – as laid out in its founding documentation – is to resolve disputes impartially, efficiently and fairly. Jooste reminded the audience that the Office was not the same as a court. In resolving a dispute the OSTI cannot subpoena witnesses – nor can it test the credibility of witnesses by cross examining, re-examining evidence or embarking on discovery. “We are an investigative body, but such investigation is only by reference to the documentation made available to us by the complainant and by the insurance industry,” he said. In addition, the OSTI is obliged to apply the principle of equity, which sometimes clashes with principles of law.

“The principle of equity is not an OSTI idea,” noted Jooste. “It is part of our founding documentation – the association agreement to which all insurers have bound themselves. There is an agreement between the insurance companies and the Ombudsman that requires the Office to apply the law to a disputed claim, tempered by the application of the concept of fairness and equity!” FAnews believes that the application of  equity and fairness principles in dispute resolution may be viewed as benefiting the client, in line with South Africa’s ongoing consumer protection reforms. It certainly appears that recent “equity-based” decisions created tension between the insurance industry and the outgoing Ombudsman (as reported by Bruce Cameron in Personal Finance, 23 January 2012). But that’s a debate for another newsletter.

Brokering a sensible working relationship

Could the strict application of equity principles cause problems? Jooste acknowledged that disputes would inevitably arise when two parties debated an equitable outcome, because fair and equitable to one party is not necessarily so to the other! But the OSTI and the insurers work through these problems. “In my short time at the office there seems to be a genuine acceptance by the insurance representatives that the concept is right – and it is in fact applied,” he said.

The other challenge to stakeholders in the short-term industry is the ongoing impact of regulatory change. Jooste joked that the regulatory environment he encountered during a two-year stint at an insurance brokerage, early in his career, was worlds apart from today. He said that South Africa’s regulatory environment was on par with those of similar offshore jurisdictions – and one that all financial services stakeholders could be proud of.

Educating the consumer

In his closing remarks Jooste singled out the need for ongoing consumer education. “Consumer education is not something the OSTI can tackle alone,” he said. “We need the help of the industry and all interested stakeholders!” He also took a moment to thank his predecessor, Martin, for his efforts in advancing the consumer education cause over the previous five years.

Editor’s thoughts: After attending Dennis Jooste’s official welcoming function we are confident the Office of the Ombudsman for Short-term Insurance is in capable hands. We’ll be watching with interest to see how the new Ombudsman fares when the OSTI 2011 and 2012 Annual Reports are published. Have you had any dealings with the OSTI in recent months? If so we’d love to know whether your client’s resolutions were handled speedily and to your satisfaction. Add your comment below, or send it to gareth@fanews.co.za

Comments

Added by emanuel, 09 May 2012
I have lodged a complaint on the 1st August 2011 regarding my claim against Regent and i was not advised in a step by step manner espescially, i am not a man for writing letters.Every time i was ignorant to certain issues i was treaten by the Ombudsmans ,they will close the files etc.I have had sleepless nights trying to put things together to explain the Obudsmans in detail but was told, they did not need piles of imformation.After 10 months of waiting/losing more fanancially i was sent on 23/05/2012 an email i should ingage in and attorney and yet Regent has had the truck removed and put on the premisses of their service provider and took a month and a half to respond to the Ombudsmans but i must pay the storage for the truck, while this case was in progress.I elevated the case to a higher autority in the Ombudsman which was referred to me by the secetary.The higher Ombudsmans name and email was given to me and i forwarded it to him but nobody responded to me, after calling their offices again a week later to find out what was happening, it was then the Ombudsmans realized the person that refered me to him was the wrong. he, then said he will forward my file to the relevant Ombudsmans.Two days have gone yet again and not even emailed to me to what the porgress is, wheater it reach the higher Ombudsman i don't Know.I am lossing hope. I should have bit the bullet and borrowed the money back then and engaged in an attorney. From day one the case has remain the same nothing has changed.Now after 10 months of waiting for the Ombudsmans to resolve the matter and with huge companies standing with me to authentify my disputes the Ombudmans declines to resolve the matter and told me i should consult an attorney.
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Added by Chas. K, 22 Feb 2012
Our brokerage assisted a client to lodge a complaint but sadly this has not been efficiently dealt with at all. Quite to the contrary. It took ages to simply get an acknowledgement. Then the OSTI's office on more than one occasion incorrectly communicated with us on cases which were not related to our complainant. To this day, many months later, the issue remains unresolved at the expense of the policy holder when, in our view, if the principle of 'equity' and 'fairness' were to be applied a ruling in favor of client should have been be made long ago. Our confidence in especially the efficient working of the OSTI has taken a serious back step!
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