Long-term insurance ombudsman recovers R185,8m for complainants

Ron McLaren

OLTI received 11,768 written requests for assistance in 2018, which was an increase of 1,000 requests compared to the 10,768 in 2017. “Of those requests, 5 978 were chargeable complaints which fell within our jurisdiction – this was an increase of 10% compared to the 5 435 chargeable complaints received in 2017,” Ombudsman, Ron McLaren says. There were more complaints about funeral benefits than any other type of benefit.

“OLTI set a new benchmark, with 91% of complaints finalised within six months,” says McLaren.

This is a 6% increase on the 85% achieved in 2017. McLaren says, “It is gratifying that the percentage of complaints finalised within six months increased to 91%. The office’s business model assisted in this regard, as we include transfers, reviews and full cases in this calculation. This was achieved despite the fact that complaints are becoming increasingly complicated to resolve.” With transfers, insurers are given an opportunity to try and resolve the complaint directly with the complainant before OLTI intervenes.

As many as 31,5% full cases were resolved partially or wholly in favour of complainants. That together with the 1,132 transfers settled directly with complainants by insurers means that in 40% of complaints there was relief for complainants. Payments in lump sums to the value of R185,8m were recovered for complainants. Compensation of R632,737 was awarded to 160 complainants for poor service by insurers, in terms of Rule 3.2.5.

Claims

“The annual report would not be complete without a full assessment on the Ganas/Momentum case, where we ruled in favour of the insurer.” However, Momentum later agreed to pay the claim on the accidental death of Mr Ganas, despite the non-disclosure of a pre-existing medical condition at the application stage. “We conclude that the legislature should reconsider the current non-disclosure legislation,” McLaren says.

There were three final determinations against Alexander Forbes Life and in one case it was ordered to pay R7,500 compensation in terms of Rule 3.2.5 “for the suffering of distress, inconvenience and financial loss”. In the final determination this was said: “The delays this office experienced in the complaint handling by Alexander Forbes, the incomplete responses and lack of supporting documentation from them added to the frustration the complainant has experienced throughout this stressful period in her life.”

“We note an increasing awareness on the part of complainants to ask for compensation for poor service, although the requests are not usually articulated so explicitly.

"A common misconception by complainants is that the amount of compensation should equal the policy benefit in question. Complainants also often express the misguided wish that the insurer should be punished by the compensation award.”

Treating Customers Fairly

McLaren points out that despite Treating Customers Fairly (TCF) being part of insurance regulation, some insurers demonstrate the opposite. In one such case involving a funeral claim for a stillborn baby the insurer had unfairly refused a R1,000 payment until OLTI intervened.

OLTI also relied on fairness in instructing Sanlam Developing Markets to pay a funeral claim on the death of a second cousin who had been described as a cousin by the complainant. The term ‘cousin’ includes second cousins in certain black languages/cultures.

McLaren adds, “During 2018 there were discussions with the ombudsman for short-term insurance (OSTI) and the National Treasury about a possible amalgamation of OSTI and this office to provide consumers with a single point of entry for insurance complaints. He says the offices of OLTI and OSTI will continue to operate as two separate entities under the umbrella of a single insurance ombudsman.

“I must stress that the office follows an ‘open door policy’ for complainants and insurers alike. We have interaction with insurers in the form of training sessions and consultations on matters of mutual concern and we frequently meet with complainants for discussions and we reach out to the public. ‘Money Smart Week 2018’ launched by the National Treasury and the Financial Sector Conduct Authority as an educational awareness programme, aimed at improving financial literacy in the country, is one such example.