10 take-aways from the long-term insurance ombudsman’s annual report

The Ombudsman for Long-term Insurance (Olti) released its annual report for 2021 last week. Here are 10 key take-aways from the report:

1. R200m recovered for complainants

The Olti recovered R200 689 324 for complainants in the form of lump sums last year compared with R177.9m in 2020. This does not reflect the value of all benefits awarded in favour of complainants, such as recurring income or instalment benefits, annuities, and the reinstatement of policies.

2. Increase in poor-service compensation

The amount of compensation awarded to complainants because of poor service by an insurer came to R948 592 in 195 complaints, compared to R817 970 in 208 complaints in 2020.

3. Record number of requests for assistance

The Olti received 17 379 requests for assistance in 2021, an increase of 22% from the 14 198 requests in 2020. This is the highest number of requests for assistance received. The Olti said the increase in the number of complaints can largely be ascribed to the effects of the Covid-19 pandemic, as insurers received more claims.

4. Increase in complaints about funeral and credit life benefits

The only product categories to record an increase in complaints last year compared to 2020 were credit life and funeral benefits. Complaints about health, disability and life cover decreased.

5. Chargeable complaints increase by 20.8%

Of the 17 379 requests for assistance, 8 163 were translated into chargeable complaints (the Olti charged a case fee), an increase of 1 407 from 2020. Covid-19 had a significant impact on the number of insurance claims and insurers’ administration of claims, which was reflected in the increase in complaints.

Chargeable complaints are categorised as:

• Mini Cases: simple complaints within the Olti’s jurisdiction but which insurers can handle without the office’s involvement. The were 284 (2020: 127) mini cases last year.
• Transfers: complaints referred to insurers to try to resolve them directly with the complainant. If not resolved and if the complainant requests the Olti to do so, they are taken up as Reviews and handled in the same manner as Full Cases. Transfers increased to 6 038 from 4 782 in 2020 (26.3%), and Reviews increased to 1 677 from 1 342 in 2020 (25%).
• Full Cases: complaints that have already been seen by insurers, and they are handled by the office from inception to finalisation. There was a slight decrease in Full Cases, from 1 847 to 1 841 last year.

6. The Olti finalised 7.58% more cases

Finalised cases include Full Cases and Reviews. These resolved cases came to 3 899 in 2021, compared with 3 624 in 2020. Of the cases finalised, 3 516 were finalised without requiring a final determination. In 383, or 9.82%, of cases, a final ruling was issued. In total, including Transfers closed, 7 533 complaints were finalised in 2021.

7. More cases resolved in favour of consumers

The percentage of cases resolved wholly or partially in favour of complainants increased from 31.73% in 2020 to 34.09% in 2021. If Transfers settled in favour of complainants are included, the percentage increases to 41.21%.

8. Declined claims the biggest reason for complaints

Insurers’ declining claims because the policy terms or conditions were not recognised or met remain the biggest reason for complaints, comprising 45% of finalised complaints. However, there were fewer of these complaints last year, 1 761 compared to 1 814.

There was a marked increase in finalised complaints about poor service, from 1 064 (29.3%) to 1 359 (34.8%). The Olti said insurers saw an influx of claims due to Covid-19, which challenged the service capabilities of some insurers.

Complaints about lapses also increased in 2021, from 246 (6.79%) to 346 (8.87%).

There were decreases in the following categories of complaint:

• Claims declined because of non-disclosure, from 4.4% to 3.1%;
• Dissatisfaction with policy performance and maturity values, from 3.1% to 2.6%; and
• Dissatisfaction with surrender or paid-up values, from 0.47% to 0.08%.

9. 3Sixty Life sent the most second reminders

The Olti publishes the names of insurers that were sent more than five second reminders in the year to respond to the office. Last year, these insurers were: 3Sixty Life, 200 second reminders; Nestlife, 18; Safrican 13; Hollard Life, Emerald Life and Workerslife, 9 each; First Rand, 7; and 1Life, 6.

10. Increase in Incompetent Cases

Most of the Olti’s revenue is derived from the fees it charges for handling cases. Last year, the office increased its benchmark Standard Case fee by R19 to R4 406. The office charges double or triple the Standard Case fee for what it calls Incompetent Cases. These are cases in which the insurer’s response was late or inadequate. The number of Incompetent Cases increased from 142 to 185.