The Ombud for Short Term Insurance’s mission is to resolve short term insurance complaints fairly, efficiently and impartially. How did they perform in 2018? How many complaints were received? The Ombudsman just released its Annual Report that provides, amongst other information, statistical data and operational results for 2018.
According to Haroon Y Laher, Chairman of the Board, OSTI’s role is not to resolve complaints in the quickest time period or to improve the overturn rate from year to year. “The role of OSTI, like any other independent Ombudsman operating within a framework of statutory regulation, is to implement justice and fairness in a process directed towards a resolution”, Laher emphasised.
Deanne Wood, the Short-term Ombud, further explained that statistical results are not necessarily indicative of performance. She shared that an insurer who scores a low overturn rate or has a low number of complaints submitted to the Ombud’s office is not necessarily “the best insurer”. On the other hand, a high score in either of these areas is equally not necessarily an indication of poor performance by an insurer. In an effort to break the entrenched thinking around insurer statistics and in the hope that it will encourage more conciliated outcomes OSTI has changed the way in which it reports its insurer statistics.
In this year’s report the statistics reveal the number of matters where the insured received some benefit as a result of OSTI’s intervention (formally described as the “overturn rate”) in two separate parts:
- The first part relates to matters where a resolution was received consensually and through discussion or conciliation with the insurer.
- The second part reflects those matters where OSTI was required to make a formal recommendation or ruling in order to compel compliance from the insurer.
In the report, Ayanda Mazwi, Senior Assistant Ombudsman, unpacked and provided a statistical analysis of matters closed by OSTI in 2018. Here is a short summary:
During 2018, OSTI finalised a total of 9 474 formal complaints. In more than two-thirds of finalised complaints, consumers were dissatisfied with the insurer’s decision on a claim.
The majority of these complaints, at 36%, related to the rejection of a claim on the basis of exclusion or warranty in the policy terms and conditions. This figure remained virtually unchanged when compared to 2017.
The OSTI notes that many consumers do not know or understand the content of their policy documents. Because it is not possible to cover all the terms and conditions of cover at the sales stage, insurers are required to provide the insured with policy documents drafted in simple language1. The insured must read these documents and consult the insurer or broker should there be a need for clarity2. If a dispute relates to what the insured was told when the policy was being sold, OSTI considers all sales communications, written and verbal3.
The remainder of finalised complaints related to complaints about non-claim related policy disputes, such as policy changes, cancellations or lapses, premium increases and service-related complaints.
Categories of complaints received
OSTI classifies complaints according to the type of insurance the consumer complains about, the issues involved and the outcome of the dispute.
- Motor vehicle insurance claims – 48%
- Homeowners – 21%
- Commercial insurance – 9% (8% in 2017)
- Household content – 5% (6% in 2017)
- Complaints related to other insurance products including personal accident, water loss, travel, all risk, mobile device, legal expenses, hospital cover and gap medical cover – 17%
Click here to download the detail of the statistical analysis of motor vehicle, homeowners and commercial insurance disputes.
Click here to download the key figures as well as insurer statistics.
The Ombudsman for short-term insurance, Deanne Wood, was also interviewed by Cape Talk’s Kieno Kammies on the statistics reported in the 2018 Annual Report. Click here to listen to the podcast.
1 Providing clients with policy documents drafted in simple language is no easy task, given that it is a legal contract. Possibly the inclusion of a plain language document, with the necessary disclaimers, will serve a more feasible purpose and also assist the intermediary in conveying all material terms more readily.
2 This is in stark contrast to many findings of the FAIS Ombud where respondents argued that the client had received the policy documentation and should, therefore, be aware of the policy conditions. The majority of clients do not understand insurance terminology – that is why the intermediary is involved.
3 This again highlights the importance of adequate record keeping during the advice process. Selective memory loss is a common disease, and can only be countered by documentary proof which you are obliged to obtain anyway.