Underwriting managers slated
The Ombudsman for Short-Term Insurance released his annual report for 2003 reporting that 2003 saw an increase in complaints received from consumers by 34%, compared to 2002.
While he was generally upbeat, Ombudsman for Short-Term Insurance, Helm van Zijl didn’t have kind words for some of the underwriting managers, who he positioned firmly at the bottom of the log in terms of performance.
“Their filing systems are in chaos, and their response times are poor. You almost get the feeling that they are more interested in premium collection, and not claims payment,” says van Zijl.
“They will repudiate claims on the most ridiculous basis, like a case where the lack of steering lock, when a car was involved in a collision, was repudiated.
“Or another instance where a collision claim was repudiated, on the basis that one of the cars involved had smooth tyres. This, in spite of the fact that the vehicle was stationary and parked.”
“There are some very good underwriting managers,” says van Zijl.
The problem is that those that are not that good, give the rest a bad name. The issue here is that the underwriting managers must be affiliated to an insurer, in terms of the Act.
“Insurers will sign up underwriting managers when they make projections in terms of premium income. What they forget to investigate is the claims ratio. And as soon as the claims start nearing the premium income level the insurer ditches the underwriting manager.”
They (the underwriting manager) then start looking around for another insurer to work for and so the cycle is perpetuated.
Turning to another low point van Zijl says that delays in claim finalisation are another low point. The number is still unnaturally high, when compared internationally, in the region of 114 days. “I would like to bring it below 100 days,” he says.
On the up side, during 2003 the office received 7,292 complaints and general enquiries from consumers, and with only a small increase in staff – now at 18 people.
Motor claims continue to dominate complaints at 64% followed by complaints relating to household contents (19%) and house structure (12%).
Biggest claims remain in the motor claims area, and this is due to the lack of a public transport system. There were more complaints this year than last year and this has resulted in a reduction in the charge to the insurers.
According to van Zijl, the average time for finalising (over-turning) a claim is in the order of three months, and their office was successful in 22.5% of complaints received, recovering R22m on behalf of complainants.
This was a drop from the previous year, and van Zijl says that this is a good sign.
There were no rulings against insurance companies, while van Zijl says that more and more of the insurers are adopting the philosophies and principles of the Ombudsman.
This is a sharp decrease from the previous year which saw 18 rulings against principally two insurers.
Van Zijl says that in some instances just the mention of a potential ruling is enough to bring matters to a head and provide a positive resolution.
At the moment the office looks at personal lines issues only.
“There have been some enquiries from smaller commercial ventures and there is certainly some scope to look at smaller commercial issues that are limited to the size of the business and physical damage only.”
He cited the UK and Australian markets as having moved down this road.
