Disgruntled consumers claw back R386m via insurance ombuds

Denise Gabriels, deputy ombud at the Ombudsman for Long-Term Insurance office (Olti), said the office had put close to R2-billion into the hands of complainants over the past 10 years. 

Her office recovered R283-million for complainants in lump sums – an average of R1.1-million per working day (248 working days in 2023) and an additional R727,838 was awarded as compensation for poor service.

In line with the previous year, complaints about funeral insurance were at the top of the list, accounting for 44% of complaints, followed by life insurance policies at 34%. About half the total complaints related to declined claims. 

The Olti annual report states that the percentage of complaints related to lapsed policies has not returned to pre-Covid levels as some policyholders were still suffering from the pandemic’s effect on their financial situation and were unable to pay their premiums. 

Gabriels said that of the 6,714 complaints received within her jurisdiction last year, 5,506 were transfers – that is, they were premature complaints. Consumers are required to attempt to resolve complaints directly with insurers before contacting the ombudsman – so these complaints were referred back to the relevant insurers. 

“Insurers settled 1,580 of these transfers directly with complainants, which equates to about 29% of transfer complaints,” she said.

Although 86% of complaints were finalised within six months, Gabriels said there was an increased level of complexity in the complaints coming through. 

Edite Teixeira-Mckinon, CEO of the Ombudsman for Short-Term Insurance office, said it had recorded payments of R103-million as the monetary payout for complainants.

Of the 12,188 complaints registered, nine were related to Covid; seven were Sasria-related complaints arising from the civil unrest in KwaZulu-Natal in July 2021; 220 were related to power surges, and 167 were in connection with the KZN floods of April 2022.

Around 40% of all complaints were generated from motor vehicle insurance, with most of these involving accident-related claims that had been declined on the basis of an exclusion in the policy. 

The predominant exclusions were a lack of due care or precaution in preventing or minimising the loss, especially in claims involving speeding; followed by misrepresentation or non-disclosure at the time of taking out the policy or during the term of the policy, and at the claim’s stage.

The second-highest number of complaints, at around 25%, related to homeowners’ claims declined due to policy exclusions. The majority of these claims related to damage caused by acts of nature and declined on the basis of gradual deterioration, lack of maintenance and wear and tear, followed by defects in design or construction. DM