Cape Town – The Ombudsman For Short-Term Insurance has received a record number of complaints against short-term insurers during 2014.

The Ombudsman returned more than R116m to consumers in 2014.

Speaking at the release of the office’s 2014 annual results, Ombudsman Dennis Jooste said 10 253 complaints against short-term insurers, such as car and household insurers, were received, an increase of 9.5% over the prior year.

The highest numbers of complaints were related to motor insurance (46.9%), house owner’s policies (20.9%), householder’s cover (8.2%) and commercial insurance (6.6%).

The main objective of the office is to serve both insurers and consumers in an impartial manner in resolving issues between them.  

“There’s no doubt that consumers are under economic stress and in this type of environment they file more complaints against insurers,” said Jooste.

However, the number of complaints received by the office per 1 000 claims received by insurers, had remained a constant three complaints for every 1 000 claims submitted to insurers during 2014, said Jooste.

Furthermore, complaints resolved with some additional benefit to the consumer reduced to 31% of total complaints, showing a continuing decline over the past few years. 

In relation to the decline in what is known as the overturn ratio, it was interesting to note that the Ombudsman For Long-Term Insurance last week reported a similar trend.

Appeal mechanism

Initiatives such as insurers implementing Treating Customers Fairly principles and the publication of insurer statistics identifying insurers who attract a disproportionate number of complaints probably also had a positive impact on the way insurers deal with complaints from their customers.

Despite the increase in the number of complaints, the average turnaround time – the period taken to resolve a dispute – was reduced to 89 days – a pleasing declining trend. Complaints unresolved after six months totalled only 54 at year-end.

An appeal mechanism, which became effective in 2013, to enable insurers and consumers dissatisfied with a final ruling made by the Ombudsman to seek redress from an Appeal Tribunal, had not been used at all.

“The appeal mechanism has been widely publicised and the lack of use of the facility hopefully reflects a high level of acceptance of rulings made by the office,’ said Jooste.

Jooste added that the Ombudsman had worked with other Ombud schemes in the financial sector to comment on the second draft of the financial sector regulation bill, which was published in December 2014. 

The bill is likely to be placed before Parliament during 2015 and contains important amendments to the way voluntary Ombud schemes will operate in future.  

This includes additional oversight by the regulatory authority, but Jooste said the legislation  would not affect the independence of the Ombudsman.

During 2014, the terms of reference of the Ombudsman For Short-Term Insurance were changed, with jurisdiction to deal immediately with a complaint rather than enquire whether the complainant had tried unsuccessfully to resolve a dispute through the insurer first.

“There were no serious objections to these amendments from the industry,” he added.

Jooste said the office of the Ombudsman would continue to focus on its primary function, which was to resolve consumer complaints informally by applying the law and equity where appropriate.