The National Financial Ombud Scheme (NFO) can intervene in purely service-related complaints, including delays in processing insurance claims, with one case resulting in compensation for a policyholder.
The case, highlighted by John Theunissen, a senior adjudicator in the NFO’s Non-life Insurance Division, is among the case studies in the NFO’s 2025 annual report, released in June.
Theunissen notes that one of the NFO’s predecessor schemes, the Ombudsman for Short-term Insurance (OSTI), did not have jurisdiction over purely service-related complaints. Although the OSTI often received complaints about delays in processing claims, it generally could not intervene unless the delay resulted in some form of financial prejudice to the complainant.
Rule 17 of the Policyholder Protection Rules (PPR), as amended in 2018, sets timeframes for insurers to make claim decisions and notify claimants. However, it does not specify what action should be taken when an insurer does not comply with those requirements.
Under its governing rules, the NFO can now intervene where a complaint is purely service-related, including delays in an insurer’s claims process. The case illustrates the consequences of failing to keep a claimant informed during a delayed claim.
Claim delayed for months
The complaint concerned damage to the roof of outbuildings on the insured property following a storm on 27 November 2024.
The complainant registered a claim with the insurer on 3 December 2024. The insurer-appointed service provider assessed the damage on 9 December.
By 13 January 2025, the complainant had heard nothing further from the insurer and queried the status of her claim. On 19 January, the insurer confirmed that it had received the assessor’s report but was seeking further information from the assessor.
The complainant again heard nothing about the claim and, on 13 March, lodged a complaint with the Ombud for Financial Services Providers. The FAIS Ombud referred the complaint to the NFO.
The insurer subsequently arranged a further desktop assessment, based on photographs taken by the first service provider. This assessment took place on 28 March, and the insurer issued a rejection letter at the end of March.
The insurer acknowledged that the claim had been delayed because of problems with the first assessor. It did not, however, apologise for the delay.
The complainant did not dispute the grounds on which the claim was rejected.
Failure to keep claimant informed
The NFO issued a provisional recommendation after finding that the insurer had failed to provide constructive feedback from December 2024 to April 2025.
The report relied on to reject the claim was based on photographs taken in December 2024, while the new assessor was appointed only on 28 March 2025. During that period, the insurer had not provided the complainant with an update or explanation for the problem with the service provider.
The NFO considered this unacceptable behaviour that was inconsistent with treating customers fairly.
It noted that, had the matter been resolved in January using the same evidence ultimately relied upon in March and April, the complainant could have taken steps to rectify the damage.
The NFO recommended that the insurer pay the complainant R3 000 in compensation for maladministration of the claim.
The insurer refused to apologise for the delay and argued that the “material inconvenience threshold” had not been met. The matter was consequently escalated.
Delay contributed to further damage
The Escalation Committee found, based on the insurer’s own submissions, that it was guilty of maladministration resulting in the delay in finalising the claim.
It also noted that the insurer had not apologised and had attempted to minimise the break in service.
During the delay, the complainant decided not to start repairs because she considered this less prejudicial to the insurer’s validation process. She was reluctant to repair the damaged property without the insurer’s authorisation, even though she had a responsibility to limit her own damages.
The committee found this approach reasonable in the circumstances. The delay left the property vulnerable to further damage, resulting in substantial distress and additional rain damage.
The Escalation Committee also found that the insurer’s conduct contravened Rule 17.8.6 of the PPR.
The rule requires insurers to keep claimants adequately informed of the progress of their claims, the causes of any delay in finalising a claim, revised timelines, and the insurer’s decision in response to the claim.
The complainant indicated that she would accept the R3 000 compensation recommended by the NFO. The insurer agreed to pay the amount, making it unnecessary for the Escalation Committee to issue a ruling, and the complaint was closed.
