Intermediaries are still an anchor in the insurance industry
The Ombudsman for Short-Term Insurance (OSTI) recently released its Annual Report for 2013. The report is an important feature in the annual calendar of short-term insurance players as it reveals how insurers fared on claims disputes which customers referred to the Ombudsman for intervention.
The Financial Services Board has been working fiercely towards an industry which is streamlined and offers the consumer increased protection. Another aspect that it wants to work towards is creating an industry which has fewer complaints. This is being achieved through making insurers more accountable for their actions through regulation and increased powers to the Ombudsmen.
As an industry regulator, OSTI’s opinion can overrule or ratify an insurer’s decision, and it can also sway a customer’s opinion about an insurer.
The good and the bad contributors
According to the 2013 OSTI Annual Report, the Ombud received 9 368 complaints. This is not a favourable indictment on insurers in the short-term industry as the 2013 complaints show an increase of 245 complaints over the amount received in 2012. In 2011, the Ombud received 8 969 complaints, which means that there was an increase of close to 400 cases in two years. Motor complaints make up the most of the complaints (48.5%), while homeowners (20.6%) and miscellaneous (17.8%) are other significant contributors.
Santam experienced a decrease in the number of complaints referred to the Ombudsman – from 9.53% in 2012 to 8.36% in 2013. We are one of a number of companies which have experienced exponential decreases and we are working hard to decrease the amount of complaints that are handed over to OSTI.
The role of the intermediary
Many of the business models in the short-term industry rely primarily on intermediaries as they are the ones who engage directly with customers, advising them about insurance matters and assisting them with their claims experience. Many of the companies that performed well according to the OSTI rankings can be attributed to the role of the intermediary.
Recent research conducted by Santam amongst its customers, revealed that when it comes to lodging insurance claims, 46% of respondents preferred to delegate the entire claims process to their intermediary. This shows the value that the FSB, and various industry Ombudsmen, show towards intermediaries who offer an important service to the industry.
The role of the intermediary is frequently under the spotlight, often for negative reasons. However, we know through customer engagement, that they still place a high premium on having access to the advice of an intermediary. The number of complaints OSTI receives about insurers can therefore not be viewed in isolation from an insurer’s relationship with intermediaries.
Claims paying performance
If companies want to become a success in the current South African market, they will have to invest in systems and processes which assist in improving the customer experience.
Although 95% of claims come through our emergency call centre, and almost half of these claims are settled within 24 hours, we have also developed an application for intermediaries to use via their smartphones to follow-up claims, perform administrative tasks and quote requests. This is a trend we have picked up in the industry and have adjusted our business model accordingly.
Given the combination of strong competition, a highly regulated environment and an economy that is constrained by slow growth, it is clear that short-term insurers are operating under enormous pressure. To thrive in this climate requires more than ‘business as usual’ as companies strive to constantly improve and find new solutions to keep existing customers and to attract new ones. For intermediary-reliant companies, seamless collaboration between the insurer and its intermediaries is vital.
