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Short-term insurance ombudsman wants quicker turnaround

19 January 2009 Gareth Stokes

The latest newsletter form the Ombudsman for Short-Term Insurance carries details of a plan to speed up the turnaround time for the resolution of complaints. The action follows a rather disappointing slide in the number of days taken to resolve complaints as reported in the 2007 annual report. 6474 Files were closed over that period; but the average number of days taken to close each case slid from 87 to 97 days. Although the Ombudsman felt that the speed of complaint resolution was of “lesser importance to the quality of service rendered and in particular, the thoroughness with which complaints are investigated and adjudicated upon” he promised that “a concerted effort [would be] made to reduce the turnaround time.” And that’s exactly what has happened.

But before a solution could be implemented, the Ombudsman had to assess why claims were taking so long to resolve. An obvious sticking point is the delay by insurers in settling complaints after the Ombudsman has ruled a complaint should be settled in favour of the insured. Another is the number of insurers who wish to defend the rejection of a claim. To this end the main focus of the Ombudsman’s plan is to encourage insurers to accept (and act on) his rulings with the minimum delay.

A reduced-fee incentive for early settlements

The OSTI thus resolved to “reduce [the insurers’] fee should a complaint be resolved (settled) to the client’s satisfaction within a certain time period.” The Board has set this incentive at 50% of the standard fee, provided the complaint is settled within 30-days of its receipt. Should the insurer decide, that on reviewing the complaint in terms of the Ombudsman’s guidelines, that the complaint or dispute should be settled in favour of the insured it could utilise this fast-track procedure. The benefit to each party is clear… The insurer gets a 50% reduction in a fee it will most likely end up paying anyway, while the Ombudsman gets to put a ‘case resolved’ sticker on a particular complaint without further delay.

FAnews Online would suggest the same insurers could save even more of their precious resources if they simply used the Ombudsman’s guidelines to assess and settle internal complaints; thus reducing the case load that reaches the Ombudsman in the first place.

Changes to mirror that of the Ombudsman for Long-Term Insurance

As part of the solution, the Ombudsman for Short-Term insurance will take steps to reduce its internal administrative burden in relation to collecting case fees from short-term insurers. They have decided to mirror the system used by the Ombudsman for Long-Term Insurance, whereby insurers are charged upfront for the use of the Ombudsman’s services. In future, a six-monthly invoicing system will be used.

The charge applicable to each short-term insurer will be determined after an assessment of “the number of complaints for the same period of the previous year (with a ten percent inflationary adjustment).” This amount will be invoiced and collected on a six-monthly basis, and will be adjusted based on the actual fees incurred during the period of assessment. Any differences will be carried over to the next invoicing period.

The OSTI believes the new system will benefit them on two fronts. First, the reduction of internal administrative resources, freeing these resources for use on claims related issues. And second, a reduction in the monthly workload of cases. The move should benefit individuals awaiting the outcome of their insurance complaints too. It’s unacceptable that victims of poor insurance decisions be forced to wait more than three months for an answer from the Ombudsman!

Editor’s thoughts:
Insurance consumers don’t like delays in receiving payouts on their insurance claims, thus anything the Ombudsman for Short-Term Insurance does to expedite complaints resolution will be welcomed with open arms. Do you think a 50% reduction in Ombudsman fees will encourage short-term insurers to settle complaints early? Add your comments below, or send them to gareth@fanews.co.za

Comments

Added by Lebo, 03 Jun 2011
Hi, Thanks for such an insightful topic. The question though i'm battling to get an answer for is, "what is the timeline that an insurance company has to provide a report back to it's client who's claimed for a car accident".... It's been over a month am i'm still waiting for my insurance company to provide me with the outcome of my claim. Thanx
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Added by Pet Beyer, 26 Jan 2009
Prehaps short term insurance should settle before it gets to the ombudsman, but yes I agree 50% is a good incentive.
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