NFO report shines spotlight on insurance disputes and claims frustrations
The National Financial Ombud Scheme's (NFO) 2025 annual report paints a compelling picture of the challenges facing South African insurers and their customers. While the scheme returned an impressive R442.9 million to consumers during 2025, the report also reveals persistent areas of friction in both the life and non-life insurance sectors, ranging from declined funeral and disability claims to disputes over motor accidents, weather-related losses and insurer communication failures.
For FAnews readers, the report offers valuable insight into the types of complaints reaching the Ombud, the products generating the greatest levels of dissatisfaction and the lessons insurers, brokers and advisers can draw from real-world disputes.
Head Ombud and CEO Reana Steyn reported that the NFO opened 50 065 cases during the year and closed 34 277, with average monthly case volumes increasing by 16% from 3 585 in 2024 to 4 174 in 2025 across the scheme’s three divisions - Banking and Credit; Life Insurance; and Non-life Insurance. Of the R442.9 million recovered for consumers, life insurance accounted for the largest share at R299 629 812.82, while non-life insurance contributed R82 888 820.70.
Funeral and life cover complaints
Life Lead Ombud Denise Gabriels said complaint volumes continued to rise across the life insurance sector during 2025. Premature cases increased from an average of 321 per month in 2024 to 421.17 per month in 2025, representing growth of approximately 31.2%. Formal complaints rose from 350.4 to 447.58 per month, an increase of 27.7%.
The division handled 5 020 complaints and secured recoveries of R299.6 million for consumers, making life insurance the largest contributor to the total monetary relief obtained through the NFO.
Funeral insurance remained the most complained-about product by a considerable margin, accounting for 46.2% of all life insurance complaints. Life cover followed at 33.9%, while disability products generated 7.4% of complaints.
According to Gabriels, declined claims continued to be the primary driver of complaints, particularly within funeral insurance and disability cover.
The prominence of funeral benefit complaints will not surprise industry participants. Funeral products remain widely distributed across South Africa and often serve financially vulnerable consumers who rely on prompt claims settlement during periods of bereavement. Any delay, rejection or misunderstanding regarding policy terms can therefore have significant emotional and financial consequences.
Disability disputes also remain particularly complex. Unlike many other insurance claims, disability assessments often involve extensive medical evidence, differing interpretations of occupational functionality and debates around policy definitions.
The life insurance division issued four final rulings against insurers during the reporting period, highlighting the Ombud's willingness to intervene where claim decisions or policy interpretations do not withstand scrutiny.
Disability ruling reinforces limits of non-disclosure defences
One of the report's most noteworthy life insurance case studies involved a medical doctor who submitted a disability claim under his life policy.
The insurer rejected the claim on the basis of alleged material non-disclosure, arguing that the policyholder had failed to disclose foot pronation treated with orthotics and a previous diagnosis of plantar fasciitis when applying for cover. The insurer contended that these conditions amounted to chronic pain requiring ongoing management and should have been disclosed during the underwriting process.
The Ombud disagreed. Following an investigation and subsequent appeal by the insurer, the Ombud found that the insurer had failed to prove material non-disclosure. Crucially, the Ombud concluded that an applicant cannot be expected to disclose information that was unknown or unforeseeable at the time of application.
The ruling further found that the insurer's characterisation of orthotics as chronic pain management was exaggerated and that the underwriting questions posed to the applicant would not reasonably have prompted disclosure of the conditions in question. The insurer ultimately accepted the ruling and assessed the disability claim under the original policy terms, resulting in payment of the benefit.
The case serves as an important reminder that while disclosure remains fundamental to underwriting, insurers bear the burden of demonstrating that allegedly omitted information was material and should reasonably have been disclosed.
For advisers, it reinforces the importance of carefully documenting medical disclosures while ensuring clients understand the scope of questions asked during the application process.
Motor and homeowners' insurance continue to drive non-life disputes
On the non-life side, complaints remained heavily concentrated in personal lines insurance. Lead Ombud Edite Teixeira-McKinon noted that motor vehicle insurance accounted for 35% of complaints received by the division, while homeowners' insurance represented 27%. The division registered 10 054 complaints during the year and resolved 11 428 complaints, while securing R82.9 million in recoveries for consumers.
Encouragingly, the division recorded a 2% decline in new complaints compared with 2024 and achieved a 3% increase in resolved matters. Average turnaround times also improved significantly, decreasing from 117 working days to 105 working days.
Teixeira-McKinon attributed the improvement largely to increased staff capacity and enhanced complaint-handling efficiencies.
Within motor insurance, accident claims dominated, accounting for 70% of vehicle-related disputes. Theft and hijacking complaints represented a further 8%. The most common source of disagreement involved claims rejected due to allegations of driving under the influence, followed by disputes involving lack of due care or reckless conduct.
These findings highlight the continued importance of claims investigations and the challenges insurers face when determining whether policy exclusions should apply.
Homeowners' insurance presented a different set of challenges. Acts of nature accounted for 42% of complaints, reflecting the growing impact of severe weather events and climate-related risks. Claims involving burst water apparatus, including geysers, accounted for a further 15%.
The leading causes of disputes were rejected claims linked to exclusions relating to gradual deterioration, lack of maintenance, wear and tear, defective design and poor construction.
For advisers and brokers, these statistics provide a useful reminder that policyholders often struggle to distinguish between sudden insured events and maintenance-related losses that fall outside policy cover.
Communication failures prove costly
Perhaps the most revealing non-life case study in the report involved a homeowner whose storm damage claim became a four-month ordeal due to poor claims administration.
After storm damage occurred in November 2024, the policyholder promptly submitted a claim. An assessor inspected the property in early December, but thereafter communication largely ceased.
Despite repeated follow-ups, the claimant received little meaningful feedback from the insurer. Months passed before a second assessment was conducted, ultimately resulting in the claim being rejected approximately four months after it had first been lodged.
The Ombud found that the insurer had failed to keep the claimant adequately informed regarding the status of the claim and had effectively left her in limbo while awaiting further assessments. Importantly, the claimant refrained from carrying out repairs because she feared prejudicing the insurer's validation process, leaving the property exposed to additional weather damage.
The Ombud concluded that the insurer's conduct amounted to maladministration and breached Policyholder Protection Rule 17, which requires insurers to keep policyholders informed about claim progress, delays and decisions. A compensation award of R3 000 was recommended and ultimately accepted.
While modest in monetary terms, the case highlights a growing industry challenge. Increasingly, Ombud complaints are not driven solely by claim outcomes but by customer experience, communication failures and delays in claims handling.
The message is clear
The message emerging from both the life and non-life divisions is clear. Consumers expect transparency, timely communication and fair treatment throughout the claims process. When these expectations are not met, disputes inevitably follow.
While the industry continues to deliver significant value and protection to consumers, recurring complaint trends suggest there remains considerable room for improvement in disclosure practices, policyholder education, claims administration and customer communication.
The organisations that invest in these areas are likely to see fewer disputes, stronger customer relationships and greater trust in an increasingly scrutinised insurance market.
Writer’s thoughts
The report demonstrates that while insurers continue to pay billions in claims, recurring disputes around disclosure, policy wording and claims handling remain a significant industry challenge. The findings also reinforce the value of clear communication, robust advice processes and effective claims administration in supporting positive customer outcomes and maintaining confidence in the insurance sector. Please comment below, interact with us on X at @fanews_online or email me your thoughts.
