Insurers cannot distance themselves from the conduct of intermediaries, while poor disclosure practices remain a major feature of many motor insurance disputes, according to Edite Teixeira-Mckinon (pictured) the Lead Ombud for Non-life Insurance at the National Financial Ombud Scheme (NFO).
During a discussion at the 2026 F&I Industry Virtual Summit on Tuesday, Teixeira-Mckinon said insurers remain ultimately accountable for intermediary conduct under the Policyholder Protection Rules (PPRs), while proper disclosure remains the foundation of the insurance relationship.
The discussion, which focused on insurance products in vehicle finance, explored motor insurance compliance, credit life insurance, add-on products, product governance, and insurer accountability in the F&I environment.
Complaint trends in motor insurance
Teixeira-Mckinon said motor vehicle complaints remain the largest category of complaints received by the ombud scheme.
Many disputes stem from rejected claims, particularly those linked to driving under the influence, material misrepresentation at policy inception, service delays, repair disputes, and disagreements over vehicle write-offs or settlement values.
The discussion also highlighted the broader financial vulnerability created by South Africa’s high number of uninsured vehicles. Teixeira-Mckinon said only about 30% of vehicles on the road are insured, despite many being financed.
Mutoda Mahamba, executive: direct and digital insurance at ABSA, said uninsured financed vehicles expose consumers to severe financial risk because customers remain liable for vehicle debt even after a total loss. Affordability pressures, he said, often leave consumers underinsured or uninsured altogether.
Although comprehensive cover remains a financing requirement, insurers are increasingly looking at lower-cost alternatives such as third-party cover to provide at least some level of protection.
“At least they limit their liability to bumping into somebody’s Ferrari,” he said.
Both speakers argued that some cover remains better than no cover at all, particularly during periods of financial strain.
Point-of-sale failures still driving disputes
For Teixeira-Mckinon, disclosure failures remain one of the industry’s biggest weaknesses under Rule 11 of the PPRs.
She said insurers do not always establish proper disclosure obligations upfront, only attempting to interrogate underwriting information once a claim has already been submitted.
“Don’t do that type of work later in the claim stage,” Teixeira-Mckinon said. “You’ve got to create proper disclosure, so that people are given an opportunity to disclose.”
She said insurers must ask precise underwriting questions and clearly explain special terms, exclusions, premiums, and financial obligations before policy inception. Insurers cannot later rely on vague or poorly framed questions when rejecting claims on grounds of non-disclosure or misrepresentation.
Teixeira-Mckinon also highlighted Rule 12, which governs intermediary arrangements, noting that insurers remain responsible for intermediary conduct even where F&I managers or intermediaries facilitate sales.
Disclosure failures at dealership level a recurring concern
In dealership environments, customers are often asked to sign large volumes of documentation while focused primarily on taking delivery of the vehicle itself.
Teixeira-Mckinon said value-added products are frequently bundled into finance agreements without being adequately explained.
Although customers sign documentation acknowledging understanding, she noted that the PPRs also consider the way products are sold and explained.
The issue of disclosure and F&I remuneration models has also come under increasing international scrutiny. Mahamba referenced recent developments in the UK market following the landmark Supreme Court ruling in Johnson v FirstRand Bank Ltd and Hopcraft v Close Brothers, which examined the legal boundaries around motor finance commissions and broker remuneration structures.
Although the court rejected broader arguments that dealers generally owe fiduciary duties to customers in standard finance arrangements, it found one transaction to constitute an “unfair relationship” because of exceptionally high commissions, inadequate disclosure, and concealed commercial arrangements between the dealer and lender.
For Mahamba, the ruling has intensified focus on whether remuneration structures could encourage behaviour that is not in consumers’ best interests.
He said insurers and lenders are increasingly reassessing remuneration frameworks to ensure F&I managers are not incentivised to prioritise higher interest rates or unsuitable products over customer outcomes.
Fair value under the spotlight
Fair value emerged as a central theme during the discussion, with both speakers highlighting growing regulatory scrutiny around product suitability, disclosure, pricing, and customer understanding.
Mahamba said lenders and insurers must ensure customers are not paying for cover that exceeds their actual exposure. He used the example of financed vehicles where the outstanding finance amount is materially lower than the retail value of the vehicle.
“It can’t be the retail value of the vehicle if the vehicle is worth R200 000, but I’m only owing the bank R100 000,” he said.
He said the issue becomes particularly important in vehicle finance, where affordability pressures and financing requirements can result in customers taking up products they do not fully understand.
Teixeira-Mckinon noted that the ombud does not assess fair value in the same way regulators do but considers whether products performed in line with what consumers were led to expect and whether TCF outcomes were achieved.
Complaints often arise, she said, where customers believe products did not perform as expected because disclosures, advice, or product explanations were inadequate at the outset.
Mahamba said regulators are increasingly looking at claims ratios, complaint volumes, and lapse rates to test whether products are delivering fair value and are properly understood by customers.
Very low claims ratios, he said, can indicate either overpriced products or situations where customers are unaware that they even have cover in place.
“You can find that you’ve got R100 that’s coming out of your bank statement. It may be so small that you’re not seeing it every month,” Mahamba said. “And because you don’t know that you’ve got this policy, you never claim against it.”
Cancellation trends may similarly point to affordability or product-suitability concerns.
“If clients buy your product, but fairly soon thereafter they cancel it, why are they cancelling if it’s adequately priced?” Mahamba asked.
Affordability versus adequate cover
The panel also explored the tension between affordability and meaningful risk protection, particularly in a vehicle finance environment where insurance premiums must fit within already stretched affordability calculations.
Mahamba pointed to growing concerns about high excess structures being used to reduce monthly premiums to secure finance approval.
He explained that customers are often approved for vehicle finance before the true cost of insurance is fully factored into affordability calculations.
“Now when you quote for insurance, he then says insurance says no, you need to pay R1 500, but your budget was only allowing you for R800,” Mahamba said. “What then happens? The excess keeps increasing.”
He said excess levels can become extremely high, with some policies carrying excesses of R15 000, R20 000, R25 000 and, in some cases, even higher.
Although this may reduce monthly premiums upfront, Mahamba warned it can create a new layer of financial risk at claims stage.
“If a client then doesn’t have that R20 000, what happens?” he said. “It means then they have to resort to unsecured lending, in some instances to very vulnerable, probably even loan sharks.”
Insurers therefore need to balance affordability with realistic claims outcomes, ensuring that products remain sustainable not only at point of sale, but also when claims arise.
Mahamba said insurers are increasingly using machine learning and data analytics to align premiums more accurately with customer risk profiles, potentially reducing reliance on excessively high excess structures.
What is working well
Despite the challenges, Teixeira-Mckinon said the industry has made measurable progress in sales disclosures and customer engagement over the past two decades.
Insurers that maintain proactive communication and clear escalation processes generally experience lower complaint volumes and better customer outcomes, she said.
Teixeira-Mckinon said some complaints escalated to the ombud could potentially have been avoided through clearer explanations and better communication during the claims process.
“Often people come to us, we’re not able to overturn an insurance decision. We uphold the insurance decision,” she said. “However, what we do add is a better explanation.”
Mahamba similarly stressed the importance of ongoing communication and customer education in reducing disputes and improving understanding of insurance products before claims arise.
“We continue communicating before even the claim comes through, so that the client actually knows what cover that they have,” he said.
Digital platforms, apps, and AI-enabled quality assurance tools are also helping insurers identify missed disclosures earlier and remediate potential issues before they develop into complaints.
AI and digital oversight
Technology and digitisation are increasingly being positioned as tools to support disclosure, quality assurance and customer communication obligations.
Mahamba said AI is increasingly being used for quality assurance and disclosure monitoring during sales calls.
According to Mahamba, AI systems can analyse sales calls, identify missed disclosures, and flag potential mis-selling risks more comprehensively than traditional sample-based quality assurance processes.
The technology also allows insurers to conduct rapid remediation through follow-up engagement where key disclosures may have been missed.
Ombud’s warning to insurers
In her closing remarks, Teixeira-Mckinon reiterated that insurers cannot distance themselves from intermediary conduct simply because sales were outsourced or delegated.
“We ultimately look to the insurer to do what is right in terms not only of equity, but the law,” she said.
Mahamba said insurers and F&I managers occupy a critical position because the consequences of poor advice, inadequate disclosure, or unsuitable cover often only emerge years after the original sale.
He noted that the average consumer claims for motor insurance only once every four years, meaning the real impact of decisions made at point of sale may only surface long after the customer has left the dealership or forgotten the adviser involved.
Mahamba said that delayed impact places a significant responsibility on insurers and F&I managers, because the consequences of decisions made at point of sale may only emerge years later when customers eventually need to claim.
“It shouldn’t really just be about the sale, but to really say: have we offered sufficient service and advice to a client to ensure that they’ve got adequate cover in place, fair cover in place?” Mahamba said.
