Judge Brian Galgut welcomed guests to the launch of the Annual Report of the Long-Term Ombudsman at the Westcliff Hotel on 10 May. Jennifer Preiss, Deputy Ombudsman for Long-Term Insurance, opened the presentation with the announcement of three records for the office: a record 9 236 complaints were received by the Office in 2010; a lump sum of payments recovered for complainants amounted to R103 484 956; and the highest amount for a single case ever was recovered – R21 million. Jennifer suggested that these figures showed the direction in which the Office is going, and, in fact, the direction in which the industry is going.
It is always difficult for the Office to predict the number of complaints it will receive annually, and the 2% increase in 2010 from the previous year was a relatively small one. However, the number of mini-cases (ones in which the insurer has not yet had the opportunity to respond) had increased, as had the number of funeral policy complaints (comprising 36% of all complaints). All the Ombuds’ offices experienced an increase in complex cases. Encouragingly, there was a decrease in cases in which the insurer is found to be incompetent. The number of claims which were declined increased from 49% in 2009, to 53% in 2010.
“WRITTEN COMPLAINTS – On average, the office receives 55 written complaints per day – 30 of these are faxed to us, closely followed by the number received by e-mail. A smaller proportion comes from post and the website.”
66% of all complaints came to the Office via fax, which indicates that the majority of complainants did not have access to technology to email the Office. 60% of the complainants had knowledge of the Ombud’s office from their policies, and 52% of the calls received at the Office were actually policy-holders attempting to contact their insurers, facts which suggest that details of the insurer are not readily accessible. 79% of cases were finalized within six months, maintaining the figure from the previous year. Most complaints originated in Gauteng, with an increase emanating from Kwazulu-Natal.
Expenditure during the year totaled R11 650 000, a saving of R610 000 on the budget. This was largely owing to the fact that the Office did not replace the staff that had left.
For the year to date (January to the end of March, 2011), the number of complaints received has increased by 18%, and the number of declined claims by 58%, probably attributable to the requirement for insurers to give the Ombud’s details when declining a claim, and therefore clients not going back to the insurer.
The Ombud suggested ways in which insurers can assist the Ombud’s Office: firstly, the insurer should give full reasons why a claim has been rejected; phrases like “doesn’t comply with policy conditions” is often not helpful to the client. Secondly, given the number of complaints regarding fictitious policies (premiums are coming off government-salaried people without their having purchased a policy), the insurer should be aware of unusual activity, for example, a single salary-earner buying a number of policies. Those insurers who use telesales should ensure that agents communicate accurately and the text from which they respond should be expressed in clearly understood terms.
Final determinations against insurers
During 2010, five final determinations were made against insurers, the full relevant details of which are available on the office’s website at www.ombud.co.za. In two of them, the issue was the enforcement of a timebar provision where the complainants’ claims had been lodged out of time. In both, it was held that, on their particular facts, it was unfair to hold the complainant to the time-bar.
In the third case, the insurer, after issuing a policy, failed for more than a year to furnish the complainant with a copy thereof and failed to provide responses to the office’s queries. A final determination was made against the insurer for payment of compensation for its poor service. The fourth case (see page 20) involved the reinstatement of a funeral policy that lapsed because of the complainant’s failure to pay a premium. Premiums received after the reinstatement were, in each month, allocated to the previous month, and, at the same time, the insurer maintained that for each month the cover remained subject to a three-month waiting period. The office held that the wording of the reinstatement did not allow for this.
The last case involved the question whether there had been non-disclosure as alleged by the insurer. The probabilities were evenly balanced, and because the onus was on the insurer the office held that its defence could not be upheld.
The voluntary schemes – the Credit Ombud, the Long-term Ombud, the Pension Funds Adjudicator, the Short-Term Ombud and the National Credit Regulator, now share a Complaints Helpline.
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