The short- and long-term insurance ombuds jointly returned almost R300m to aggrieved consumers last year as complaints spiked during the Covid-19 pandemic.
Both offices said that while complaints initially dropped off in the early stages of the first lockdown instituted at the end of March 2020, complaints subsequently rose sharply from June as the impact of the shutdowns affected everything from business interruption to funeral policy claims.
The nature of complaints was also affected by the pandemic with those related to motor vehicles falling 12% during the year as people travelled less, while business interruption claims rose 5% as the lockdown forced shops, restaurants and factories to close.
The office of the Ombudsman for Short-term Insurance (OSTI) helped put about R119.55m back in the pockets of consumers who approached its office for assistance last year, while the Ombudsman for Long-term Insurance (OLTI) recovered R177.9m for complainants, according to a joint 2020 annual report released on Tuesday.
The report was the first since a “soft amalgamation” between the OSTI and OLTI, which saw them operate via a single website portal, the Insurance Ombudsman, that went live on February 4 2020.
The OSTI registered 11,095 new complaints in 2020, up 7% from the previous year, of which 10,805 were closed during the year. Of all the complaints registered with the OSTI in 2020, 786 related to Covid-19, with 562 relating to business interruption insurance and 224 linked to travel insurance. Complaints related to Covid-19 comprised 7% of total complaints registered in 2020.
Of the finalised complaints, 36% related to motor vehicle disputes, followed by homeowners’ or building disputes (21%), commercial insurance (14%) and household contents (5%).
The OLTI received 14,198 written requests for assistance in 2020, a 19.2% increase from the previous year, with 6,756 being chargeable complaints. That was the highest number of written requests the OLTI has ever received. Declined claims were the biggest cause of referrals to the OLTI, comprising 50% of total complaints. The OLTI received 456 complaints directly related to Covid-19 or to the lockdown, of which 36% were in respect of credit life benefits. Claims for retrenchment and an inability to earn an income entailed the highest number of these complaints.
The OLTI said it has had to deal with new and difficult issues generated by claims being declined and the resulting complaints it received. One such issue that arose was whether an insurer is obliged to pay a claim for benefits related to an inability to earn an income when a policyholder received Temporary Employee/Employer Relief Scheme (Ters) payments. The office subsequently determined that Ters could not be regarded as income earned and was therefore not a valid reason for declining a claim.
The OLTI expressed concern that certain insurers were not applying the “treating customers fairly” policy correctly, which it said was unfortunate given that many policyholders were already in distress.
“There was an uneven inflow of complaints during the year — a slowdown in the initial lockdown period and an expected surge of complaints in the second half of the year,” said Jennifer Preiss, deputy ombudsman for the OLTI. “What was unexpected was the devastation of the second wave and its effect.”
Preiss, who retires this year, has announced that Denise Gabriels will take over the role.
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