Two conflicting headlines in recent industry newsletters raise the question whether clients are treated fairly by the industry.
“Complaints to (Long-term) ombudsman reach record number.”
“South African consumers are very satisfied with the insurance industry.”
Closer scrutiny reveals that the first was based on the Long-term Ombud’s annual results for 2013, while the other finding came from a recent survey.
Both the Long- and Short-term Ombuds provide statistics per member product provider on complaints received. The method of calculation differs though, due to the nature of their business.
The Long-term Ombud
In previous years, the LTO received complaints from the public and took it up with the insurer. In June 2013, the Long-term Ombud (LTO) introduced a new model to handle complaints.
- A complaint in which there was some interaction between the complainant and the insurer about the complaint, will be taken up by the LTO as a “full case” and it will be handled until the finalisation thereof.
- A complaint in which there was no such interaction, will be referred to the insurer as a “transfer” for resolution by it, dealing directly with the complainant.
- If such a “transfer” is resolved to the satisfaction of the complainant, the LTO requires confirmation thereof from the complainant.
- If such a “transfer” is not so resolved, the complaint is returned to the LTO by the insurer for a “review”.
- The office of the Ombud will discuss such a “review” with the complainant and, if required to do so, the complaint will be taken up as a “full case” by the LTO.
Approximately 75% of complaints received by the LTO are handled in accordance with the new business model. There were several marked improvements:
- In the “transfers” that are resolved, the complaints are finalised very expeditiously.
- In any “review” which becomes a “full case”, the complainant does not have to re-submit the complaint.
- The adjudicative resources at the LTO could be applied to handle complex and time-consuming cases
While the new model has not yet run for a full year, the signs are that there is a significant improvement in the time taken to resolve complaints.
From June 2013, the Long-term Ombud (LTO) also started publishing complaints per insurer on its website. It is extremely important to understand the context of this information – one cannot simply look at the number of complaints and make a judgement call. Some have significantly bigger client bases, which would obviously lead to more complaints than much smaller ones. Others were only introduced to the new model later, and reflect very few complaints.
One insurer, by way of example, had one single complaint against it, and the finding was in favour of the client. To propagate that this provider has a 100% failure rate in client delivery may be statistically correct, but far from the truth.
On average, about one third of the complaints were resolved in favour of the complainant.
The statistics published on the STO’s website possibly provides more comparable data. It compares the total claims handled with the number of complaints received. It then provides data on the number of complaints where the outcome was fully or partially in favour of the client.
The nature of the business is such that a member average cannot, and is not published. There were at least three variables during the 2012 book year which affects the correctness of the total figures.
Despite this, the unofficial average of 37% of successful complaints compares favourably the same number for the LTO for the 2102 year. For the latter, this reduced to about 33% in 2013, and we hope to see the same happen at the STI.
Is this acceptable?
Some would argue that every complaint overturned should be seen as unfair treatment of the client. In my view, every case should be treated on its own merits.
The fact that complaints are now measured per provider makes it possible to distinguish between those who treat customers fairly, and those who use loopholes to sidestep it.
The following telling comment from the LT Ombud should also be borne in mind:
The consensus of opinion in the office is that the complaints to it are getting increasingly complex and that complainants are becoming more demanding and persistent in pursuing their complaints. It is well-recorded that these trends are experienced internationally in offices which are similar in function and structure to our office.