Ombudsman for long-term insurance publishes 2018 annual report

The Ombudsman for long-term insurance has published its 2018 annual report.

Requests for assistance received

The report states that the Ombud received 11 768 written requests for assistance in 2018, which was an increase of 1 000 complaints compared to the 10 768 in 2017. Of those requests, 5 978 were chargeable complaints which fell within the Ombud’s jurisdiction – this was an increase of 10% compared to the 5 435 chargeable complaints received in 2017.

Of the chargeable complaints 3 951 were Transfers, and insurers managed to settle 1 132 directly with complainants. This amounted to 28.6% of Transfers, which is a higher percentage than the 24% in 2017. Reviews decreased slightly to 1 596 compared to the 1 610 in 2017.

“It is not always clear what the drivers are for complaints to the office,” the report states. “Although we receive complaints throughout the year, there are certain months when the numbers are higher. Not surprisingly, after the Annual Report release and the corresponding publicity we usually see
an increase, which occurred in May 2018. After the publicity surrounding the Ganas/Momentum case in November 2018, we expected to see a spike in complaints, but the numbers stayed the same as in October. As can be expected, December usually has the lowest number of complaints in the year. However, complaint numbers and trends remain difficult to predict.”

Finalisation period

The report states that it is ‘gratifying’ that the percentage of complaints finalised within six months increased to 91% (85% in 2017). “The office’s new business model assisted in this regard, as we include Transfers, Reviews and Full Cases in this calculation.”

Description of chargeable complaints 

MINI CASES – consist of simple complaints that are within the jurisdiction of the office, but which insurers can handle without the office’s involvement. “The complainant is always advised that if the matter is not resolved he/she can revert to us. There are also some complaints which
have no prospect of success. The assessing staff dismiss these complaints and explain the reasons for the dismissal to the complainants. These complaints are charged the reduced mini case fee.”

TRANSFERS – these are complaints not previously seen by insurers and referred to them to try and resolve directly with the complainant.”If not resolved and if the complainant, when contacted by the office, requests us to do so, they are taken up by the office as Reviews and handled in the same manner as Full Cases.”

FULL CASES – these are complaints that have already been seen by insurers and they are handled by the office from inception to finalisation.

CASES FINALISED – cases finalised incorporate Full Cases as well as Reviews. These are the cases that the office considered and resolved during the year. In 2018 this amounted to 3 367, four less than the 3 371 in 2017.

CASE FEES – the office is funded by way of a levy which amounts to 10% of its funding and the rest is by way of case fees which are charged for cases handled by the office, irrespective of the outcome thereof. The Standard Case fee, which is the benchmark figure, was estimated to be R3 980 for 2018. The actual case fee is 8.6% lower at R3 629, which is even lower than the 2017 Standard Case fee of R3 707. This was due to the higher number
of chargeable complaints received and the financial management in the office.

Cases finalised are categorised as follows for charging
purposes:

STANDARD CASES – this term refers to the benchmark category of cases charged at a case fee of R3 629.

INCOMPETENT CASES – these are cases where the insurer either gave a response outside of the Ombud’s time standards or gave an inadequate response.” These cases are charged at either double or triple the Standard Case fee, depending on the extent of the incompetence. It is pleasing that there is a reduction in these numbers.”

COMPLICATED CASES AND COMPLICATED PLUS
CASES – these cases are difficult to deal with because of complex legal, medical or financial issues or as a result of the complainant’s persistence. “These categories increased, reflecting the increasing difficulty we experience with complaints.”

BASIC CASES – these are cases involving complaints about funeral policies issued by small insurers where the complaint is resolved on the first response by the insurer. A reduced fee is charged for these cases.

NATURE OF COMPLAINT
The Claims Declined category had the highest number of complaints, with the Poor Service category the second highest. “This is the same pattern as in previous years,” the report stated. “It is a matter of concern that more complaints about Lapsing of policies were received, even though it might be caused in part by the tough economic situation. The high lapse rate of policies in the long-term insurance industry has always been problematic.”

The report added that during 2018 the Ombud started to record complaints according to the Treating Customers Fairly outcome categories which are reflected in the new Policy Protection Rules.

RESOLVED WHOLLY OR PARTIALLY (WP) IN FAVOUR OF COMPLAINANTS

The percentage of cases resolved in favour of complainants increased slightly from 29% in 2017 to 31.5% in 2018. Funeral benefits made up 48.8% of the W/P cases.  “If we add the Transfers settled, then the W/P percentage increases to 40%. This is slightly higher than the percentage the last few years, which was around 37%. R185.8 million was recovered for complainants in the form of lump sums,” the report says. This figure does not reflect the value of other benefits, such as recurring income disability benefits, annuities and reinstatement of policies, etc.



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