September 21, 2021

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Insurance complaints soar 49% in first half

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The long-term insurance industry faced a record number of complaints in the first half of this year related to the second wave of Covid-19, particularly funeral claims, the Office of the Ombudsman for Long-term Insurance (OLTI) said yesterday.

OLTI deputy ombudsman for long-term insurance, Denise Gabriels, said that the office had experienced a 48 percent increase in complaints in the first half of 2021 compared to the comparative period in 2020.

“Our staff were under pressure to keep up with the increased workflow under difficult conditions. In addition, because we are still not fully back in the office, as are insurers, there were some constraints in the complaints-handling process,” said Gabriels.

“Although we obviously cannot predict what will happen for the rest of the year, the third wave of the Covid-19 virus is likely to have an impact on the number of complaints, which means that the high numbers may well continue,” she said.

There were 8 300 requests for assistance in the first half of 2021 compared to 5 606 during the same period last year. There were 4 205 chargeable complaints compared to 2 844 in 2020. A total of 1 929 cases were finalised (1 834 in 2020). Some 93 percent cases were finalised within six months. The OLTI recovered R77.9 million for the complainants.

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Gabriels said the increased deaths during the second wave of Covid-19 led to the rise in complaints relating to funeral claims. Some funeral insurers experienced a substantial increase in claims during the December/January holiday period when staff members were on leave. This resulted in instances of poor claims handling and delays, which in turn led to complaints to the OLTI.

Complaints in the lapsing category were higher in 2021 than in 2020 as policyholders struggled to pay premiums under very difficult economic circumstances.

The office said that a surprising phenomenon was that of the complaints finalised, the percentage of the claims declined category had reduced to 44.95 percent in 2021 and 50.66 percent in 2020.

Many of the complaints in the poor service category, 58.2 percent, related to claims, where the insurer had not declined the claim, but the complaint was about the claims process which was often delayed.

Gabriels said 74 percent of the chargeable complaints, that is, 3 126 complaints received in 2021, were transfers. These were complaints transferred by the OLTI to insurers to try and resolve directly with the complainants.

Releasing its annual report in May, the OLTI said that it received 14 198 requests for assistance in 2020, which was an increase of 2 283 or 19 percent over the 11 915 received in 2019. It said that its jurisdictional assessment team had to work hard to keep up with this inflow.

Some 6 756 were chargeable complaints which it accepted for further consideration, this was an increase of 10 percent over the 6 107 of 2019. Transfers increased to 4 782 from the 4 051 in 2019. Insurers managed to settle 1 373 of these directly with complainants. This amounted to 28.7 percent which was consistent with 28.06 percent in 2019 and 28.6 percent in 2018. Reviews increased to 1 342 from 1 293 in 2019.

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