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Insurance ombuds return R400m to consumers, with claims and complaints rising during Covid

Insurance claims rose during the height of the pandemic. Picture by ScreenPost/UnSplash

Insurance claims rose during the height of the pandemic. Picture by ScreenPost/UnSplash

Published May 18, 2022

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The Ombudsman for Long-term (life) Insurance and the Ombudsman for Short-term (non-life) Insurance, together put almost R400 million back in the hands of consumers who complained in the past financial year.

In a joint 2021 Annual Report, the Ombudsman for Long-term Insurance (OLTI) noted an increase in the number of claims, especially funeral and credit insurance claims, from 2020 to 2021, and subsequently the number of complaints received also rose.

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“The increase in the number of complaints can largely be ascribed to the effects of the COVID-19 pandemic, as insurers have widely reported on the increased number of claims,” Denise Gabriels, deputy ombudsman for Long-term Insurance said.

The 17 379 written requests to the Office of the OLTI for assistance exceeded the record of 14 198 set in 2020, as did the 8 163 chargeable (to the insurer) complaints received. Including transfers closed, 7 533 cases were finalised, compared with 6 512 in 2020.

About R200.7 million was recovered for complainants in lump sums and an additional R948 592 was awarded to complainants as compensation for poor service.

“Our subscribing members - (like our staff) - also had to operate under challenging circumstances. Many had staff working from home, which had its own challenges of accessing information and documentation.

“Combined with an inordinate rise in the number of claims, especially funeral and credit insurance claims, this gave rise to many service-related complaints.

“Despite pockets of service lapses and poor complaints handling, in general the insurers responded well to the challenges,” said Gabriels.

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In a joint 2021 Annual Report, the Ombudsman for Long-term Insurance (OLTI) noted that R200m was recovered for complainants while the Ombudsman for Short-term Insurance (OSTI) said the monetary benefit for consumers amounted to R197 188 388.

Both offices made mention of the emotional strain experienced by staff who had to contend with the loss of relatives, friends and colleagues because of the COVID-19 pandemic. The Office of the OSTI said this was reflected in some key operational results.

Gabriels said the ravages of COVID-19 continued in 2021, with the third wave hitting particularly hard. Many employees contracted the virus, resulting in prolonged absences, and some lost close relatives.

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The civil unrest in KwaZulu-Natal and Gauteng impacted on the national psyche, and in the Western Cape taxi violence prevented some employees in the Office of the OLTI from getting to work for several days. Loadshedding further exacerbated the situation.

“Against this backdrop, the reported results are remarkable, and for this all tribute must go to the staff, who displayed resilience and perseverance, despite the adversity,” Gabriels said.

For the Office of the OSTI, the compound effect and collective trauma of all the waves of the virus, and their accompanying fear and grief, negatively impacted staff, especially with the loss of a second colleague, Gadija Fisher, who passed away on 1 July 2021. On 16 November 2020, Mary Tshabalala passed away.

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Edite Teixeira-Mckinon, CEO of the Office of the OSTI, said: “2021 was a year of struggles, continued resilience and hope for a brighter tomorrow. Going through two years of a harrowing pandemic has taught us that just surviving is not enough; we need to reshape ourselves for the future.”

The Office of the OSTI did not attain two operational targets that it set for itself in 2021, namely an average turnaround time (TAT) of 120 days and ensuring that the number of complaints outstanding for six months did not exceed 10% of the number of open complaints. It ended the year with an average TAT of 138 days, and with 332 complaints outstanding for six months instead of 300.

11.7% fewer complaints were registered in 2021 when compared to 2020. The Office of the OSTI registered 9 797 new complaints of which 259 were COVID-19-linked complaints - 197 relating to business interruption and 62 were about travel insurance.

The COVID-19-related complaints made up 2.6% of all the complaints registered by the office in 2021. In 2020 COVID-19-related complaints comprised 7% of all the registered complaints.

Complaints resulting from the civil unrest, looting and damage to infrastructure that swept through the provinces of KwaZulu-Natal and Gauteng in July 2021 were specifically categorised as “SASRIA” complaints, ie, complaints specifically dealt with by the South African Special Risk Insurance Association (SASRIA). 31 SASRIA complaints were registered last year, with 23 relating to commercial lines and eight relating to personal lines insurance.

The Office of the OSTI ended the year with 3 052 open complaints, compared to 4 210 in 2020, the difference being primarily due to the 7% increase in registered complaints in 2020 and the almost 12% decrease in registered complaints last year.

OSTI finalised 10 879 complaints, 0,7% more than in 2020, and from the complaints finalised it recorded a monetary benefit and value for consumers of R197 188 388. An overall customer experience rating of 76% out of a target of 80% was maintained, the same score as in 2020.

Teixeira-Mckinon acknowledged the dedication and hard work of the staff during an exceedingly difficult year.

“There is a sense of rebuilding and returning to a former state of being, including returning to a normal state of health, mind and strength, and, at the same time, adjusting to a new and different way of life,” Teixeira-Mckinon said.

A significant moment in the history of the Office of the OLTI was the retirement of Jennifer Preiss as Deputy Ombudsman after more than 20 years. She will continue to serve in a part-time capacity as a consultant and adjudicator.

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