The Ombudsman for Short-Term Insurance (Ombud) released their 2006 annual report at a lunch held at the Johannesburg Country Club on Tuesday, 27 March 2007. New developments in the 2006 year included recognition of the Ombud in terms of the Financial Serv
There was a significant increase in both the number of cases received and the amount of money recovered on behalf of complainants. The 7, 187 formal complaints received were 24.8% more than the previous year and led to the recovery of R67, 377, 615 for consumers.
Wed like to move away from an in-depth analysis of the statistics included in the latest report and focus instead on some of the lessons learned from the various judgements made by the Ombud. To this end, we've summarised and commented on some of the rulings included as case studies in the report...
Keeping the insurers in check
The Ombud is quick to act on the complainants behalf where there is evidence of unethical or unreasonable claims rejection by the insurer.
The first case study dealt with a claim rejection based on vehicle use. The insured had an accident on the way to visit his daughter, who had recently had a baby. The insurer rejected the claim on the basis that the insured was using the vehicle for business purposes, because the insured had indicated his intention to continue to a lunch meeting after visiting his daughter. The Ombud ruled that establishing the use of the vehicle "at the time of the loss" was critical and overturned the rejection.
Another claim was rejected where a newly insured suffered loss due to a burglary in a town house complex. The extra security required by the insurer had not been installed at the time of the burglary, although the insured had the items on order. In this ruling the Ombud requested that an insurer view the case sympathetically in light of the actions of a responsible policy holder. The insurer compensated the client.
Attempts by insurers to blur definitions to their own benefit were also scorned by the Ombud. The case study dealt with an insurers attempt to count the value of a watch as jewellery to lessen the extent of their liability on the claim. The Ombud ruled that a watch is not generally regarded as jewellery and ordered the insurer to compensate the insured in terms of the policy wording.
How open and honest communication limits potential loss
The common thread running through all the case studies in which the Ombud ruled in favour of the insurer is communication. Claim rejections will diminish if the insured regularly and honestly communicate their intention and changes in their situation to the insurer. Additional care at policy inception will probably also lessen the number of new cases being referred to the Ombud.
The Ombud respects the rights of insurers to reject claims where the insured neglects to advise the insurer of changes in their circumstances which may lead to increased risk. An example of such a situation would be where a householder is having building renovations done on the premises.
Full and proper disclosure is also important. The Ombud refused to overturn a rejected claim where the insured had failed to disclose a prior accident claim in her motor vehicle insurance application. The Ombud agreed that incomplete disclosure of this nature would prevent the insurers from correctly underwriting the risk.
If there is evidence of fraud or misrepresentation from the clients side, the Ombud is likely to uphold any rejected claim. This was evidenced by the ruling in a case study where a claimant included items in a burglary claim which had already been claimed for after a previous burglary.
Conduct a regular annual review of your insurance policy
One of the best ways to avoid unnecessary claim rejections is to conduct an annual review of your insurance policy. Ensure that the items listed in the policy, and values attached to these items are accurate. Re-read the policy document to make sure there are no clauses which no longer apply to your circumstances.
Whenever your circumstances change you must advise your broker or insurer about the change. Do this in writing and keep a record of the instruction. This will ensure that you are in a strong position should you become the victim of an unfairly rejected claim in the future.
Editor's thoughts:
Have you had any dealings with The Ombudsman for Short-Term Insurance? What is your opinion of the service rendered? Send your comments to gareth@fanews.co.za.
Get the latest issue of FAnews