CRA Insurance News – South Africa

The Ombudsman for Short-Term Insurance (OSTI) expects a surge in Covid-19 complaints around business disruption and travel in the next financial year.

In addition, the insurance sector could be negatively impacted as a result of the financial pressure on consumers, it said.

OSTI, which provides consumers with a fair and transparent dispute resolution mechanism for short-term insurance disputes, has published its annual report on operations for 2019.

While the 2019 report does not cover the period of the current contagion, the impact of the global pandemic is certain to be felt by the organisation, the industry and consumers over the forthcoming year.

As such, OSTI chief executive officer, Edite Teixeira-Mckinon, said that some of the trends identified in the 2019 report are likely to be disrupted. “Already the signs are evident,” she said.

“Up until the end of March 2020 we had received, year-on-year, substantially more complaints, so that trend is continuing,” said Teixeira-Mckinon.

“But in April we saw a decline in complaints, and that was predominantly because 49% of our complaints are from motor accidents and motor vehicle claims. With less vehicles on the road, there are less claims and therefore less complaints. So there was an evident decline in April and May 2020.”

The numbers

Over the past year, OSTI said closed 9,167 complaints out of 10,367 complaints received and recovered more than R94.9 million in favour of consumers. This was a marked up-tick from both 2018 and 2017, when just over R87 million was recovered.

Motor vehicle insurance complaints made up 49% of the total number of received complaints (2018: 48%), followed by homeowner’s insurance at 20.1% (2018: 21%).

Commercial insurance complaints decreased to 7.9% (2018: 9%) while household content insurance grievances were at 6% (2018: 5%).

Over the year, OSTI recorded revenue of R45.2 million (2018: R38.1 million) and operating costs of R42.8 million (2018: R39.7 million).

“Going to court is expensive and combative, so our office offers a safe space for the resolution of disputes,” said Teixeira-Mckinon. “In addition, our decisions don’t set any precedents and each matter is decided on its own merits.”

This means a swift resolution for consumers and less risk for insurers, she said.

There are, concluded Teixeira-Mckinon, understandable concerns regarding the potential for cancellations of insurance cover as a result of the lockdown and Covid-19.

In such an environment of uncertainty, finding ways to keep communication open and to resolve disputes quickly and effectively will become even more paramount.

Key takeaways

  • 10,367 formal complaints received (2018: 9,779)
  • 9,167 formal complaints closed (2018: 9,474)
  • 117-day average turnaround (2018: 104 days)
  • 56% of cases finalised within four months (2018: 65%)
  • 85,483 calls received by call centre (2018: 88,421)
  • R94,934 891 recovered in favour of insured (2018: R87 250 982)
  • 49% of complaints received related to motor insurance (2018: 48.2%)

Article by Business Tech.