How Covid-19 may impact your long-term insurance
The Covid-19 crisis will impact on the office of the Ombudsman for Long-term Insurance (“OLTI”), as it will on aspects of life. At this stage it is too early to predict what the eventual impact will be and whether it will have a marked effect on the numbers and trends seen in the past, including in 2019.
“Unfortunately, we live in challenging economic times and this could cause complaints to spike,” said the Ombudsman, Judge Ron McLaren.
The office received 11 915 written requests for assistance in 2019 which included 6 107 chargeable complaints. Three thousand five hundred and fifty-eight full cases were finalised and 34.12% of these were resolved wholly or partially in favour of complainants. This is an increase from 31.5% in 2018. More than R200 million was recovered for complainants in the form of lump sums. This figure does not reflect the value of all benefits awarded in favour of complainants such as income disability benefits, annuity payments and reinstatement of policies. In addition, R874 286 was awarded to complainants as compensation for poor service by insurers in 190 complaints.
Transfers of complaints to insurers, where a complainant has not previously complained to the insurer, increased slightly to 4 051 complaints from 3951 in 2018. Insurers deal directly with complainants in these matters and managed to settle 28.06% in favour of complainants. If a complainant is not satisfied after dealing with the insurer the case is taken up by the Ombudsman.
It is important to note that 91% of complaints were finalised within six months. This is something that the Ombudsman has worked very hard to achieve. The benchmark fee insurers are charged for a standard case was R4 086 for 2019. Key indicators over the last five years show a reassuring consistency.
Types of complaints
We can see continued trends filtering into the types of complaints that the Ombudsman received in 2019.
Most of the complaints that the Ombudsman received in 2019 dealt with funeral cover (42% of complaints received), with this proportion increasing slightly relative to 2018 (41% of complaints). The major cause for complaints across all benefit types continues to be declined claims (52.53% of all complaints), followed by service complaints (30.94%). 3Sixty Life Insurance was the worst performing insurer in terms of the service it provided, as reflected in the number of second reminders (120) the office had to send to the insurer because of a lack of response to complaints.
The Ombudsman says that some of the reasons for the increasing trend of funeral complaints are the number of lives now covered for funeral benefits and the fact that funeral benefits provide cover for an urgent need and claimants are therefore understandably quick to complain. The fact that the percentage of cases resolved in favour of complainants in funeral complaints was 42%, as compared to the 34.12% overall percentage, points to this last reason. Unlike other forms of life insurance, the claimants in funeral complaints, may not have intermediaries that can intercede on their behalf and therefore the Ombudsman is the only form of recourse available.
The one unusual feature in 2019 was the number of final determinations against insurers. There were nine such determinations which is more than in any previous year. When there is a final determination against an insurer the determination is published, and the insurer is named. The insurers in question were Momentum Life, Sanlam Life, Sanlam Developing markets (in two cases), Clientèle Assurance, Safrican Insurance, Nedgroup Life, Centriq Life and BrightRock Life. In the balance of cases resolved wholly or partially in favour of complainants, there were 71 provisional determinations which were accepted by insurers and 1133 cases where insurers settled the cases without the need for a determination.
The future of complaints
In 2019, the offices of OLTI and the Ombudsman for Short-term Insurance concluded a Shared Services Agreement which provides for the practical implementation of an amalgamation of these two critical bodies. This included Judge McLaren’s appointment as Ombudsman for both offices, effective 1 January 2020.
In addition to the existing means of submitting complaints to the offices there will be a single portal for complaints to the offices for complainants who are uncertain where to complain and a seamless process for transferring any complaint from one office to the other.