Ombudsman for Short-Term Insurance resolves complaints worth R119m in consumers’ favour during 2013

The Ombudsman for Short-Term insurance resolved claims worth R119m in favour of consumers (2012: R114m) during 2013.

According to the Ombudsman’s latest annual report, 9 368 complaints were received last year, an increase of 245 or 2.7% over 2012. A constant 3 out of 1 000 claims filed with insurers ended up as complaints to the Ombudsman.

The office of the Ombudsman offers a free service to consumers seeking to resolve disputes with insurers. It covers both personal and commercial short-term insurance products, such as motor and household insurance.

Of the total complaints 4 542 (48,5%) involved rejected motor insurance claims, while (1 934) 20,6% related to houseowners’ insurance. Only 5% (468) were commercial.

“The increase in the number of complaints may be because there was an increase in claims registered due to bad weather conditions over the past year and the growing awareness of consumers of their contractual rights,” said Ombudsman, Dennis Jooste. “The effect of the Financial Services Board’s Treating Customers Fairly campaign may also have started to have an effect, with consumers becoming more educated about customer service issues.”

Jooste said thanks to the professional staff at the office and the high level of co-operation from insurers, 87% of cases were resolved within six months in 2013, up from 63% in 2012. The average days taken to resolve a complaint reduced from 183 days in 2012 to 111 days in 2013. The number of matters unresolved after six months as at the end of December 2013 stood at only 72 compared to 1319 in 2011 and 352 in 2012.

With 2014 marking 25 years since the Ombudsman was established, Jooste emphasised how the industry had matured over the past twenty five years, with enhanced powers being vested in the Ombudsman to make rulings.

“Initially insurers were hesitant and undertook only to give ‘serious consideration’ to a recommendation by the Ombudsman,” he added. “Now insurers are contractually bound to honour any rulings made by the Ombudsman. These additional powers have been used responsibly, which shows in the fact that a final ruling has never been ignored by an insurer. Nor has there been an application to court to review a final ruling of an Ombudsman.”

The average turnover rate for the year was 33%, which means only 1 out of 3 complaints made by an insurer was overturned. This is more or less in line with prior years.

Another major development during the year was the introduction of an appeal mechanism. Three eminent retired judges will serve on the appeal tribunal, chaired by former Chief Justice, the Honourable Mr Justice Sandile Ngcobo. Two former judges of the Supreme Court of Appeal, namely Judge P.M. Nienaber and Judge T.D. Cloete will also serve on the panel.

Jooste said discussions with regulators continued around the model of oversight envisaged in the new Financial Sector Regulation Bill which would see the Financial Services Ombud Schemes Council oversee all voluntary Ombud schemes. “There are, however, certain aspects of the bill which remain of concern and these are still being addressed by the Ombudsman in consultation with the National Treasury,” said Jooste. “The bill is far from settled and no doubt there will be further amendments before it is enacted as law.”

He added that it was critical that the confidence of the insurance industry, consumer organisations and the general public be retained. “The benefits that the Ombudsman offers is no longer an issue for debate,” adds Jooste. “When one considers the free services rendered to consumers and the number of cases dealt with by the office, I believe that the facts speak for themselves.”

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