Consumers take no nonsense from insurers

(Shutterstock)
(Shutterstock)
Johannesburg - Complainants are becoming more demanding and persistent in pursuing their complaints, according to the latest report by the Ombudsman for Long-term Insurance.

There is also a growing use of social media to resolve complaints, according to Long-term Insurance Ombudsman, Judge Ron McLaren.

The Ombudsman for Long-term Insurance deals with complaints about long-term insurance products such as life, disability, health and funeral cover.
 
Most of the complaints received by the Ombudsman for Long-term Insurance during 2013 related to poor communication and claims which insurers had declined.

There was also a lot of dissatisfaction around values and lapsing of long-term insurance policies.

According to its newly released annual report complaints about life cover have fallen from 35% of the complaints in 2011 to 31% in 2013.

While funeral policies made up 37% of the total complaints in 2011, this fell to 31.5% in 2013.

But complaints in the healthcare category, relating mostly to hospital cash plans, increased from 9% in 2011 to 20% in 2013.

Concern about excessive claims

The increase in these complaints is driven by excessive claims under these policies, which has been a concern for the office over the past two years.

The latest report shows the number of complaints lodged with the Ombudsman for Long-term Insurance continued to grow in 2013.

A total of 10 028 complaints had been received by the office, an increase of 4.5% over 2012 and a new record for the office.
 
The consistent increase in complaints received over the past few years has been driven by the significant growth in the number of policies sold by the insurance industry as well as public awareness of Ombudsman offices in general.

During 2013 the office finalised 4 496 full cases, with 77% of the cases finalised within six months.

The office recovered R103.8m (in lump sums) for complainants over the past year with 33% of cases resolved wholly or partially in favour of complainants.

In addition, compensation of R343 741 was granted to consumers for poor service.

“Ombudsman schemes used to be on the periphery of financial services, but they are now viewed as being integral to financial services,” said McLaren.

He took over the position of Ombudsman on June 1 2013, following the retirement of former Ombudsman, Judge Brian Galgut.

McLaren said many insurers have improved their resolution of complaints relating to funeral cover.

"Rogue" funeral administrators

It remains worrying to him, however, that there are "rogue" funeral administrators, who collect premiums on behalf of insurance companies, but do not pay over the premiums collected to the insurer.

“This inevitably leads to a cancellation of the policy by the insurer and non-payment of any benefit to the life insured’s family,” he said.
 
The Ombudsman said the Twin Peaks Model of Financial Regulation to be implemented by the National Treasury will seek to strengthen the ombudsman system.

It will require all financial institutions to be members of an ombudsman scheme through changes to the Financial Services Ombud Schemes (FSOS) Act.
 
Judge Leona Theron was elected as chair of the Council of the Ombudsman for Long-term Insurance.

She was appointed as a judge of the Supreme Court of Appeal in 2010 and is currently the youngest member on that bench.
 
In a move towards greater transparency, the Ombudsman published complaints information about each insurer for the second time on www.ombud.co.za.

McLaren pointed out that the complaints data should be used by intermediaries, consumers and others in conjunction with other measures, such as the size of the insurer.

Social media
 
He also explained that there is growing use of social media to resolve complaints.

“Financial institutions tend to react swiftly to social media complaints because of the threat of negative publicity, which in turn encourages the use of this as a medium for complaint resolution,” he said.
 
“Ultimately, what complainants want is ‘fair’ resolutions from financial institutions – not just a reliance on legal or contractual grounds."

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