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Complaints decrease, but is it enough?

24 April 2018Jonathan Faurie

As we approach the second quarter of the year, focus within the short term insurance industry shifts towards the release of the Office of the Short Term Ombudsman’s (OSTI) Annual report. Over the past few years, OSTI has been dealing with a growing number of complaints. This year presented some good news, and a change of script, as there was a decrease in the number of complaints. In 2017, OSTI received just over 9 000 complaints, compared to 2016’s 10 000 complaints.

Predictably, motor vehicle claims made up the majority of the complaints received by the Ombud. This was followed by home owners claims and thereafter commercial claims. But what are behind these claims? What are policyholders upset about? 

Taking chances

Ayanda Mazawi, Senior Assistant Ombudsman at the OSTI, pointed out that the majority of motor vehicle claims (74%) were a result of accidental damage. 

However, this figure mainly comprised of claims that were rejected by insurers on the basis that policyholders were driving under the influence of alcohol at the time of the accident. 

“Some insurers have introduced measures such as take me home services which hopefully would manage the risks associated with drunken driving. However, it is clear from the 2017 statistics that driving under the influence remains a very real problem for the South African insurance industry,” said Mazwi. 

According to the report, the second highest cause for policyholder complaints was rejections based on policyholders alleged misrepresentation of underwriting details at sales stage. Non-disclosure strikes again. 

Mazwi points out that examples of this include misrepresentations regarding regular driver details, previous insurance and other matters such as claims history, credit history, security devices as well as the question regarding personal or business use of the vehicle. 

“A significant number of complaints also related to rejections based on the policyholder’s obligation to exercise due care and to prevent loss. When the Ombud assesses disputes of this nature, it requires that there be a causal connection between the insured’s conduct and the accident,” said Mazwi. 

Vehicle warranties and mechanical breakdown claims made up 9% of the claims considered by the OSTI in 2017. Mazwi added that the Ombud has noted that the cause of these disputes often arose from the insurer’s advice provided at sales stage. 

Domestic disturbances

Over the past two years, home owners have been under significant pressure when it comes to claims. This has largely been driven by extreme weather events. 

This had a major impact on the complaints received by the OSTI (which related to homeowner’s insurance). Mazwi points out that 61% of complaints received by the OSTI under homeowners insurance related to storm damage. 

A further 11% of claims related to bursting water apparatus and 4% to theft claims. 

“The primary cause for the complaints was the dissatisfaction with the rejection of claims on the grounds of damage rising from gradual deterioration, maintenance, as well as wear and tear, which is not the responsibility of the insurer to remedy. In general, the Ombud will assess these matters by asking whether the loss or damage would have occurred if the property had been properly maintained,” says Mazwi. 

She adds that the secondary cause of complaints related to quantum disputes; the most prevalent being the settlement calculation in circumstances where the policyholder was underinsured. 

The OSTI Annual Report adds that there were also a significant number of complaints relating to rejections by insurers on the basis that no insured event actually occurred. 

Commercial worries

While the Ombud does have limited jurisdiction when it comes to commercial policies, it does handle some complaints. 

Mazwi pointed out that the majority of complaints considered by OSTI related to building claims (which made up 28% of the commercial claims), which was followed closely by motor vehicle claims (which made up 25% of commercial claims). 

The primary cause of complaints when it came to buildings was rejections by insurers on the ground of gradual deterioration and maintenance. Under motor claims, the majority of complaints were based on rejections surrounding concerns based on oadworthiness of heavy commercial vehicles.  

Editor’s Thoughts:
It’s interesting to see how the numbers change; but the reality is that the amount of claims received by insurers are still really high. How often do you refer your clients to the Ombud because the insurer just does not want to pay your client’s claim; no matter how hard you fought? Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts jonathan@fanews.co.za.


The OSTI Annual Report can be viewed here

 

Comments

Added by Dr Gerrit Sandrock, 24 Apr 2018
Every year these statistics confirm that the popular misconception of insurers failing to service their clients and treating them unfairly is patently untrue. In fact we are getting better at our service levels.

Our industry is inexplicably slow to acknowledge that we by and large do the job that our clients pay us for well. We need to build more pride in the place that we have in the economy. For too long we have been painted as uncaring parasites on the insuring public. I have heard people in the industry confirm that we are selling to reluctant customers, that our product is a grudge purchase, and even that the meme that we treat our customers unfairly is indeed true.

We need to change our own thinking and work on our own self-respect and professionalism, and then we will get the respect that we deserve for how we conduct ourselves.


Report Abuse
Added by Marius, 24 Apr 2018
People will always complain. They expect to pay the minimum but want the maximum at claim time and they don't read the fine print on their policy documents.
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