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Consumer Affairs
Saturday, June 6, 2015 - 02:16
A little TCF

As life assurers started to implement Treating Customer Fairly (TCF) principles, complaints against the industry dropped during 2014, according to the office of the Ombudsman for Long-term Insurance.

“There seems to be improvement in the complaints handling procedures of at least some long-term insurers, if not all,” said Ombudsman Ron McLaren. “Despite an increase in the number of policies sold, growing public awareness of the office and the role of social media, there was a decline in the number of complaints received over the past year.”
The office received 9 246 written requests for assistance during 2014, a reduction of 8% over the previous year, which included 5 104 chargeable complaints. It finalised 3 822 complaints against long-term insurers and recovered more than R147m for consumers, while awarding more than R450 000 in compensation for poor service. About 74% of the cases were finalised within six months and nearly 30% were resolved wholly or partially in favour of complainants.
Half of the complaints received by the Ombudsman’s office included claims that were declined on contractual terms or “non-disclosure”. Most others related to poor communication and poor service. Complicated cases increased from 15,7% in 2013 to 18% of the Ombudsman’s case load.
While there is no specific date for the implementation of TCF regulations, the Financial Services Board (FSB) has stated that it expects regulated entities to already be applying fair treatment principles in their overall business processes. McLaren said while some insurers are busy with TCF implementation, there was a discernible failure on the part of others to apply the principles.
He added that there were still excessive hospital cash back complaints, but there had been a significant reduction in the number of complaints after the FSB had conducted inspections of an insurer from which most of the complaints had been received in 2013.
McLaren noted that a new type of complaint encountered in the past year involved the timing of proof of insurability. In particular, policies that ask applicants whether they have had a negative HIV test in the preceding three years and if the answer was ’yes’, the policy is sold and the applicant does not have to provide proof of the test. However, if a claim is instituted on death, the insurer may require proof of the test. “This case is still under consideration,” he added.
McLaren said the office had also received a number of complaints by policyholders whose expectations had not been met when measured against what their insurers actually delivered. Causes of a divergence between expectation and reality included inappropriate marketing of policies; unclear or unusual policy wording; and a lack of ongoing communication between the insurer and policyholder.
To take an independent view of whether the office of the Ombudsman provided a reasonable service in its complaints resolution process, a new Independent External Assessor (IEA), retired Western Cape High Court Judge Cleaver, was appointed. “The role of the IEA is to consider complaints about the way in which the Ombudsman handles cases – disagreements about the merits of decisions are excluded,” explained McLaren.
An external, independent review of key aspects of the office’s business was also conducted and found that the office of the Ombudsman complied with and exceeded international standards and expectations for a financial ombud scheme.
Surveys conducted also found that 90% of complainants would recommend the ombudsman’s service to others. Amongst insurers, 96% regarded the office’s decisions as fair and unbiased.
The office also publishes individual insurer complaints data on its website, www.ombud.co.za to promote accountability and transparency. McLaren said this was to encourage insurers to benchmark their standards of complaints handling against other insurers and to learn from insurers which appear to be better at complaints handling. Included for the first time are the names of the insurers that received more than five second reminders from the office and the number of reminders sent to them.
 

Copyright © Insurance Times and Investments® Vol:28.5 1st May, 2015
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