On 1 March 2016 the Office of the Ombudsman for Short Term Insurance welcomed a new Ombudsman, Deanne Wood. She has highlighted the key issues which were addressed by her predecessor, Dennis Jooste in his 2015 report. The total rand value of complaints resolved in favour of the insured/complainant, was R 100,712,182. This is the lowest amount in five years, which indicates that there has been a decrease in the number of formal complaints received by the office.
According to Wood, the most significant improvement for the year 2015 was the decrease in turnaround times to resolve complaints. It took, on average, 74 days for their office to resolve complaints in 2015. This is a significant decrease from the 223 days in 2011. There were only 31 complaints that took more than six months to resolve, compared to the 1319 of such complaints in 2011.
All complaints were categorised based on the type of complaint. The breakdown per category was as follows:
- Motor insurance – 48%
- Houseowner Insurance – 18%
- Householder insurance – 8%
- Commercial Insurance – 7%
- Miscellaneous – 19%
The Ombud has noted that the decrease in the number of total complaints is owing to insurers implementing ‘Treating Customers Fairly‘ (TCF) campaigns within their businesses to reduce complaints and to resolve claims received.
In order to show the practicality of their work, the Office of the OSTI has also included a few case studies to indicate why there was a complaint and whether the insurer acted honestly, fairly and with due skill, care and diligence.
One of the reasons the Ombud finds that insurers end up with complaints, is owing to the ‘onerous wording of travel insurance policies when it came to emergency situations.’ In order to illustrate this point, a case study regarding a complaint against Santam Limited for rejecting a travel insurance claim was included in the report. A client suffered injury resulting in her losing a tooth whilst on holiday in Peru. The client experienced a lack of appropriate medical facilities in the country and only received temporary treatment in Peru with a view of having her tooth replaced upon her return home to South Africa. Santam rejected the claim on the basis that the follow-up treatment in South Africa was not an insured benefit. Santam therefore stated that the cover ceased when the client returned to South Africa. The client however stated that she was not offered an additional or extended benefit and therefore not provided with appropriate advice and options which suited her needs.
Santam referred to a telephone recording of the sales call between their consultant and the client, whereby the client was asked whether she wanted “the normal free cover” or would like to “top it up” at a cost of R800, which she declined. Upon review of the record, the Ombud stated that it was clear that because the client declined to top-up her cover, the consultant omitted to offer her “follow-up treatment cover” where she would have continued to be covered on her return home. The Ombud was of the view that the insurer erred in assuming that the client would not have accepted this additional cover and recommended that Santam settle the claim in full, to which they agreed.
There are instances where the Ombudsman for Short Term Insurance finds that a complaint received relates to inappropriate advice provided to a client and this may then be referred to the FAIS Ombudsman. These case studies can, therefore, help advisors to ensure they do not make the same mistakes. This case study highlights the importance of ensuring that clients are provided with clear information about the different options available to them so that they can make an informed decision. Irrespective of whether the information and advice is delivered via a call centre or face-to-face, the principle of treating customers fairly applies. It is also important that all information given to a client is clear, unambiguous, in plain language and easy to understand.
Based on the analysis of the OSTI’s annual report, the value which a financial advisor can offer to clients is quite evident, as they are in a position to break down any clauses and conditions in insurance policies which are unclear and ambiguous. Additionally, the information provided and recommendations made to clients must suit their needs. These are all elements of the TCF principles which will benefit the client and protect the advisor.
If you are in an environment where representatives do sell policies over the phone or make use of a prescribed script, they should be properly trained and have a good understanding of the product. A consultant should not merely press a client for a “yes” or “no” answer, but should probe the client with questions so that the needs and objectives can be established and appropriate information and advice provided.