INSURANCE
Surge in insurance complaints
Posted Thu, 13 Apr 2006
The ombudsman for long-term insurance saw a surge in complaints about declined claims in 2005, according to his office's annual report.
"There has been a surge in complaints in this area, particularly because of one insurer's poor administration," said deputy ombudsman Jennifer Preiss.
There were about 2200 of these complaints, where claims were declined because policy conditions were not met.
"This aspect smacks of poor administration and lack of proper client care on the part of these insurers and does not reflect well on their efficiency," ombudsman Justice Peet Nienaber noted in the report.
In the majority of these cases the claims were paid.
Cases relating to claims refused because of non-disclosure however have been decreasing steadily, from over 200, since 2003.
Preiss said in the past most complaints related to poor service. In 2005, the ombudsman received 8985 complaints, a 12 percent increase on 2004. Of the complaints in 2005,
5470 were classified upon completion as "full cases" which the office had to investigate actively.
These were divided into standard, complicated — due to the nature of the case — or incompetent — where the insurer's response was inadequate.
Both of the latter categories increased substantially over the past year. "What is disappointing is the continuing upward trend in incompetent cases — typified by tardiness, lack of commitment or efficiency on the part of insurers in dealing with complaints after they had reached our office," Nienaber wrote in the report. These had increased by 46 percent.
The chairman of the ombudsman's council noted in the report that the increase in the number of complaints could be due to greater dissatisfaction with insurers generally.
"But it can also simply mean that more policies are sold overall with a corresponding increase in complaints," wrote Judge Gerald Friedman.
The number of cases resolved in favour of
complainants increased to 42 percent. Nienaber said the office hesitated to "name and shame" insurers as it could achieve better results by not naming them.
"One of the advantages of confidentiality is that you can get the insurer to make concessions," he said. The life insurance industry should blame itself for the public's negative perceptions about it.
"In remodelling themselves as money-making organisms, insurers as a body neglected... their policyholders," he added.
Sapa
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