Business interruption-related complaints account for nearly half of Osti settlements

Only 259 of the new complaints registered by the Ombudsman for Short-term Insurance (Osti) last year were related to Covid-19. But settlements in Covid-related business interruption (BI) complaints accounted for 49.5% of the R197 million of what the Osti called the “monetary benefit and value” for consumers who approached the office for assistance.

The percentage of new Covid-related complaints fell to 2.6% in 2021, compared with 7% in 2020. These complaints consisted of 197 BI and 62 travel insurance complaints, according to the Osti’s annual report for 2021.

The Osti’s member insurers settled BI complaints valued at R97 704 980 after the courts handed down judgments on the causal connection between the lockdown regulations and the interruption to businesses.

“Many of the claims pertaining to these complaints were settled by the members before the office issued a recommendation,” the Osti said.

The ombudsman received 31 complaints related to the South African Special Risk Insurance Association in the wake of the unrest in July last year. Of these, 23 were commercial lines and eight were personal lines complaints.

Fewer claims, fewer complaints

Overall, the Osti registered 9 797 new complaints last year, 11.7% down from 2020, which it attributed mainly to the decrease in claims to non-life insurers – most registered complaints emanate from claims disputes.

However, the rand value of complaints resolved in favour of complainants increased by 65% compared to 2020, from R119 548 901 to R197 301 630, because of the 246% increase in the value of commercial complaints settled in favour of consumers.

Apart from the decrease in Covid-related complaints, there was a decrease in the number of motor vehicle-related complaints as a result of fewer vehicles on the road and fewer incidents for which to claim because of the lockdown.

Before Covid, 50% of all complaints were related to motor vehicle insurance, and this dropped to 43% at the end of December 2021.

The decrease in complaints might be good news for insurers and consumers, but it had a negative impact on the Osti’s revenue, which fell to R44.5m from R48m in 2020. Operating expenditure was R44.3m.

The Osti levies a fixed fee for each complaint registered against a member insurer. The fee per complaint increased from R4 400 in 2020 to R4 500 in 2021. A penalty fee of double the current fee is charged to insurers for delays in resolving complaints.

Vehicle insurance remains responsible for most complaints

The Osti finalised 10 879 complaints last year, 0.7% more than in 2020.

Most of these complaints, 42.6%, related to motor vehicle insurance disputes, and the office finalised 7% more vehicle insurance disputes compared to 2020.

The second highest number of complaints related to homeowners’/building insurance, at 22%.

This was followed by commercial insurance complaints, at 14%, and household contents insurance complaints, at 6%. The figures in these categories remained more or less constant compared to 2020.

The balance of complaints, 15%, related to other types of cover and general policy queries.

The Osti recorded a resolved ratio, also known as an overturn ratio, of 18%, the same as in 2020. The resolved/overturn ratio is an indicator of those complaints where the insurer’s decision was changed by the office with some additional benefit to the complainant.

The office ended the year with 3 052 open complaints compared to 4 210 in 2020, which it attributed mainly to the 7% increase in registered complaints in 2020 and the almost 12% decrease last year.

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