This link will open the complaints data from the Non-Life Division of the National Financial Ombud Scheme’s 2024 annual report. The data pertains to the 25 insurers (participants) about which the Division received the most complaints.
When the Ombud for Short-term Insurance (OSTI) published similar statistics in its annual reports, the data always came with disclaimers, cautioning readers not to draw rash conclusions about which insurers were the “best” or “worst” in terms of customer service or complaints-handling.
Edite Teixeira-Mckinon (pictured), the Lead Ombud: Non-life Insurance, told Moonstone that these disclaimers remain valid, noting that “context is absolutely everything”.
The statistics need to be interpreted in terms of an insurer’s market share. “You cannot say that Santam is performing the worst according to the ombud scheme because it has the highest number of complaints,” said Teixeira-Mckinon. Santam is the largest short-term insurer in South Africa.
If there is a consistent correlation between the volume of complaints received about an insurer and the volume of claims it receives, one cannot conclude that an insurer is performing poorly in terms of complaints. Generally, insurers with more in-force policies have more claims, which will result in more complaints, because most complaints sent to the Non-life Division are about rejected claims, Teixeira-Mckinon explained.
If the number of complaints received about an insurer is out of sync with the number claims, that could be a sign of poor customer service. But even then, one also needs to look at the resolved (or overturn) ratio, which shows the percentage of complaints where the Division found in favour of the complainant (consumer).
Unlike the tables published by the OSTI, the NFO’s table does not provide a breakdown of the number of claims received by each insurer during the year, or the complaint rate, which was the number of complaints per thousand claims received by an insurer.
Few decisions in favour of the insured
The last column of the table shows the percentage of cases where the Division overturned, wholly or in part, the insurer’s stance to the benefit of the insured. As the figures show, the percentage of complainants resolved in favour policyholders is relatively low.
For the full 2024 year, the Division recorded an overall resolved ratio of 16.5% (12% over the 10 months from 1 March to 31 December 2024), which was in line with the ratio for the past two years. Before that, it was 18%. In ombud schemes in other countries, the ratio is between 20% and 30%, Teixeira-Mckinon said.
She said the percentage of cases resolved in favour of consumers has decreased over the years, which indicates that insurers have been learning from the ombud schemes. In the main, insurers are applying equity considerations long before a complaint reaches the Division.
The decline in the resolved ratio, as well as in the number of complaints to the Division, can be attributed to insurers’ improving their internal dispute-resolution mechanisms.
“I think our industry was one of the most proactive in that regard. They understood the reputational risk of going to an ombud scheme and having such figures published, and they started taking some serious note of that,” said Teixeira-Mckinon.
The OSTI started publishing complaint statistics in 2013.
“There’s been a real robust effort to try and enhance internal processes. So, most claims that get rejected have gone through a whole committee. Most insurers have set up internal committees where they have representatives from across the different departments […] discussing that claim and whether they’re going to maintain the rejection or not,” she said.
The Policyholder Protection Rules (published under the Short-term Insurance Act) require insurers to establish internal dispute-resolution mechanisms. The Treating Customers Fairly principles, which apply across the financial sector, have also played a role in improving insurers’ approach to handling complaints.
Notwithstanding the improvement, Teixeira-Mckinon said the Division still receives complaints that it should not – for example, consumers who complain that their insurer is deducting premiums after receiving notification to cancel the policy. Ideally, she said the Division should not only be receiving fewer complaints, but complaints should be confined to complex disputes or “grey areas”.
Most non-life complaints have already gone to the insurer
The table shows the number of “premature complaints”, which are complaints that were submitted directly to the NFO before the complainant exhausted the insurer’s internal complaint processes.
The NFO sends these complaints to the insurer and provides it with an opportunity to resolve the complaint within 21 days directly with the insured. If the insurer resolves the complaint within 21 days to the satisfaction of the insured, the Division will close the complaint, and the NFO will give the insurer a 50% discount on the fee that it charged.
The Division charges an insurer about R2 500 per premature complaint, while the fee for a formal complaint is around R5 000.
Teixeira-Mckinon said even premature complaints can be quite admin-intensive. The Division must monitor the complaint and ensure it has been resolved before it can be recorded as closed.
If a premature complaint is not resolved, it is registered as a formal complaint – hence the figures in the column headed “Matters converted to formal from premature”.
Teixeira-Mckinon said the Non-life Division receives few premature complaints compared to the other divisions of the NFO. Only 5% of complaints received by the Division are resolved during the premature process. In most cases, the insured has already complained to the insurer. In the other divisions, up to 45% of the complaints are premature.
The higher number of formal complaints impacts the Division’s turnaround times because these complaints require some degree of investigation. Its turnaround times tend to be higher than those of the NFO’s other divisions.
In most cases, the investigation is quite intensive because the Division must obtain the reports on which the insurer relied when it made its decision – for example, engineer’s reports, medical reports, tracking company reports, or reports from accident reconstruction experts.
Until last year, the Non-life Division had experienced an increase in the number of complaints for three consecutive years, and 5 931 active complaints were carried over from the OSTI into the NFO on 1 March 2024. The Division had to resolve those legacy complaints while working on complaints coming into the NFO, using two different case management systems.
Teixeira-Mckinon said the Division’s turnaround time increased last year. This was largely because of the switch to the new system and changes to complaint-handling processes. But the turnaround time has since decreased significantly. It is currently about 115 days compared with 177 days.
Benefit is not always cash in hand
The table shows the number of formal complaints finalised with some benefit to the insured.
“Some benefit” does not necessarily mean the policyholder received a cash payment. For example, if, through the Division’s intervention, an insurer stops debiting the bank account of an insured who cancelled her policy, the benefit would be the cancellation and the refunded premiums.
An insured also benefits if the Division finds that an insurer should not have rejected a claim, because it did not prove that the insured committed fraud. This is a significant benefit to the insured, because it is unlikely that another insurer will insure someone who discloses that their previous insurer cancelled their policy because of fraud, Teixeira-Mckinon said.
Feedback to the industry
The Division conducts a trends analysis based on the complaints that it has resolved over a six-month period. It provides feedback to the industry on emerging trends, as well as to the Ombud Council, as is required by the Financial Sector Regulation Act, Teixeira-Mckinon said.
It also provides insights of a general nature to the Financial Sector Conduct Authority.
If the Division detects a trend in complaints regarding a particular insurer, it engages with that insurer and informs it what the Division is seeing, so it can do something about it.
“Obviously, you don’t want the same type of complaint over, and over, and over again. That becomes a systemic issue, which we are under an obligation to report to our regulators. So, we do give fair warning to our participants before we raise anything with the regulators.”
Most complaints are resolved via conciliation
The Division issued only one formal ruling against an insurer last year (“Non-life ombud rules that insured can keep written-off vehicle”).
The Division rarely issues formal rulings because most insurers accept that if a complaint reaches the stage where the ombud issues a provisional ruling in favour of the complainant, they need to reconsider their position. In the overwhelming majority of cases, complaints are resolved through conciliation without the need to make a provisional ruling.
This, Teixeira-Mckinon said, is an indication of the level of co-operation the NFO receives from the insurance industry. “And it’s not to say we don’t have heated debates, and we sometimes agree to disagree.”
An insurer will not simply get a ruling out of the blue. There will be a lot of engagement before that happens because the Division understands the reputational risk to the insurer. In terms of the NFO’s Rules, the name of an insurer that receives a formal ruling will be published.
I’ve read the entire report and I must say it’s very informative to even the common man on the street so to speak. The feedback I got frm this has really boosted my knowledge in regards to claims.