The insurance industry had experienced a difficult year‚ with reported catastrophic losses of close to R2bn in 2012.
"Although the floods in Mpumalanga and Limpopo and hailstorms in Gauteng affected the underwriting results of insurers‚ by year end‚ they had not caused a major increase in the number of complaints received by our office‚" says Short-Term Insurance Ombudsman‚ Dennis Jooste.
The Office was able to resolve claims worth R113.7m in favour of the insured in 2012‚ compared to the prior year's figure of R117.7m.
Most of the complaints received by the Office of the Ombudsman involved motor claims (48.4%)‚ followed by householder's (22%) and house owner's claims (8%) - a pattern experienced for many years and which remained unchanged during 2012.
Positively‚ the turnaround time - the amount of time taken for the Ombudsman's office to resolve a dispute - reduced from 183 days or just over three months in the first six months to 158 days in the second six months. The statistics for the first three months of 2013 show an average turnaround time of 133 days.
"One of the reasons for the substantial improvement in turnaround times is one-on-one meetings held with insurers during the year‚" says Jooste. "We held 96 meetings in 2012 where insurers were requested to reduce their response times and pressure was put on our own staff to ensure deadlines given to both insurers and complainants were met," he says.
A substantial improvement was also seen in the list of complaints unresolved after six months. In January 2012 there were 1‚319 files on this list and by year end‚ the list had been reduced to 352.
He noted that the overturn rate for the year was 33% compared with 35% the previous year. This is an indication that the decision of the insurer with respect to a complaint has been influenced in some respect by the office of the Ombudsman‚ with some benefit to the insured.
"One reason for this could be that insurers may possibly be treating policyholders more fairly at claims stage‚" explains Jooste. "However‚ it could also mean that speculative claims are being lodged with the office of the Ombudsman‚ given the adverse economic circumstances."
This year‚ for the first time‚ the Office of the Ombudsman published the names of insurers along with the number of complaints received. Insurers will now be named on the office's website although the identity of complainants will remain confidential.
"What is important is the proportion of complaints to this office relative to an insurer's share of the total claims reported to the Financial Services Board‚" says Jooste. "The clearest indicator of this is the number of complaints to this office per thousand claims received by an insurer."
He says that the so-called "Twin Peaks" policy under the Financial Services Laws General Amendment Bill whereby the market conduct of financial services providers will be supervised by the Financial Services Board and financial solvency issues will be under the eye of the National Treasury‚ could see all Ombudsman Schemes falling under the umbrella of a centralised‚ single Ombudsman. All governance issues would be handled by the chief executrive of the centralised Ombudsman's office‚ leaving only dispute resolution functions to be determined by the sectoral Ombuds.
Jooste says the Treating Customers Fairly (TCF) initiative by the National Treasury is gaining traction. "In our meetings with insurers we have encouraged them to familiarise themselves and give practical application to‚ the TCF principles and trust that this will be reflected in how insurers go about treating their customers in future," he adds.
Jooste says the core function of the Office of the Ombudsman is to resolve disputes involving repudiated insurance claims. "It is necessary to keep the investigative procedure informal and cost effective‚" he says. "We should be seen as a consumer watchdog to ensure that fair play prevails. However in order to maintain our unbiased‚ impartial role‚ we should not become consumer activists‚ or a spokesman for the insurance industry."
The procedures of the Office of the Ombudsman do not provide for oral evidence and cross-examination of insurers or complainants. Moreover, legal argument by skilled legal practitioners is not permitted.
"The number of complaints received in 2012 demonstrates that there is a need for an impartial‚ free service for consumers to resolve short-term insurance complaints outside of the formal legal system‚" says Jooste.
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