The devil’s in the detail of the Short-Term Ombud’s statistics
Statistics are telling; but they do need to be approached with caution. This was the message of the Ombudsman for Short-Term Insurance, Dennis Jooste, when he presented his annual report in Johannesburg on 22 May. Jooste’s first year as Ombud saw the O
“At first blush, a difference of 40 days is not all that impressive, but looking at the huge backlog of unresolved matters we were faced with at the beginning of 2012, it’s actually quite good,” Jooste told the assembled guests at the function.
“We also insisted that insurers do their homework fully before referring a complaint to the office. If there are no facts supporting the repudiation of a claim, we can’t give the insurer indefinite opportunities,” he said. Insurers now have two opportunities to respond to a complaint.
Jooste pointed out that by working closely with insurers it had been possible to bring response times down quite significantly.
Individual insurer statistics now available
For the first time, statistics on the working of the Ombud’s office (OSTI) with regard to individual insurers are available. But although the increased transparency is welcome, the figures themselves cannot be viewed out of context.
It’s tempting to draw conclusions about insurers based purely on the number of complaints against them. First of all, these statistics focus on personal lines claims (this information is provided by the Financial Service Board) and personal lines complaints (the OSTI records these). Commercial complaints have been excluded.
Secondly, even though it may appear that certain larger insurers have attracted a low number of complaints compared to smaller insurers, one must remember that larger insurers issue more policies that cannot form the basis of a complaint to the OSTI.
Thirdly, although viewing the proportion of complaints to the OSTI in the light of an insurer’s share of total claims reported to the Financial Services Board (FSB) should give a fair idea of the number of claims that are dealt with unfairly by an insurer, one also needs to take into account overturn rates – when an insurer’s decision regarding a complaint was in some sense changed by the OSTI.
A high overturn rate could indicate that an insurer isn’t treating its customers fairly – or it could show that insurer and Ombud are unusually co-operative when it comes to resolving consumer complaints.
Comparisons are odious?
With all this in mind, let’s look at insurer statistics covering the period January 2012 to December 2012. “A misunderstanding of statistics can be damaging as particular interpretations can be used,” Jooste cautioned. It’s therefore important that one not look at figures in isolation.
The insurers that received the highest number of complaints were Auto & General (1206), Absa (836), Santam (833), Outsurance (702) and Hollard (626). With regard to Auto & General, for every 1000 claims received by the insurer there were 5 complaints to the OSTI. Compare this to Oakhurst, which received 37 complaints for every 1000 claims received and Chartis (now AIG Insurance) received 30 complaints for every 1000 claims received – surely more telling figures.
Auto & General’s overturn rate was 43.81% – not the highest by any means, considering Relyant’s overturn rate was 60%, JDG Micro’s was 64,71% and Vodacom’s and Ace’s was 66.67% (and again, a high rate doesn’t necessarily equate to poor service).
For the consumer, it may be more revealing to assess how many complaints were finalised that benefitted the insured. Auto & General scored highest here, with 577 such claims, followed by Absa (370), Hollard (294) and Santam (292).
Editor’s thoughts:
The FIA says it has welcomed the Ombud’s decision to include insurer statistics in its annual report, rightly saying that it provides transparency at claims stage. The OSTI’s intention to put an appeal mechanism in place appears well-meaning – both insurers and consumers will be given leave to appeal – but this is going to add volumes of work to the OSTI, probably at cost. Do you think an appeal mechanism is a good idea or a bad one? Comment below or email [email protected].
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