This is the most complained-about insurance sector in South Africa

The office of the Ombudsman for Long-term Insurance says it recovered R184.4 million in the form of lump sums for consumers from long-term insurance companies during 2015.

It said that complainants received more than R527 666 in compensation for poor service, adding that the total did not include income benefits, annuity payments and the value of non-monetary benefits.

At the release of its annual report for 2015, Long-term Insurance Ombudsman, Ron McLaren said it had received 9 815 written requests for assistance in 2015, an increase of 6% on the previous year.

Of these, 5 018 were chargeable complaints, with 3 491 cases full cases finalised and 75% of cases finalised within six months of receiving them. Three out of 10 (29.8%) cases were resolved in favour of the complainant, slightly up on 2014’s 29.7%, the Ombud said.

The nature of complaints followed a similar trend to the previous year, with claims declined by long-term insurers comprising the lion’s share at 55% of the total complaints submitted.

Complaints about poor communication, historically the second largest category of complaints, showed an annual decrease.

“It is promising that insurers seem to have worked hard to communicate more clearly with their clients about policy terms and conditions,” said McLaren. “Good progress has been made on complying with Treating Customers Fairly principles too.”

The types of long-term insurance products most consumers complained about were:

  • Funeral cover – 35% of complaints
  • Life cover  – 31%
  • Health cover – 14%

Complaints in the health category decreased for the third consecutive year to 14% as a result of fewer complaints about hospital cash plans, the watchdog said.

McLaren noted that there had been a steady increase in the number of unreasonable complainants and in the number of complex complaints against long-term insurers.

“This appears to be a worldwide phenomenon, with the reasons for unreasonable conduct including anger, frustration and an exaggerated sense of entitlement,” said McLaren.

“Some complainants claim to be seeking ‘justice’ or ‘a moral outcome’ but tend to display unreasonable arguments, behaviour, demands and persistence as well as unwillingness to co-operate.”

McLaren also noted that there was an increase in the number of complaints that were lodged directly with the office of the Ombudsman, rather than through insurers. These complaints, known as Transfers increased by 7% year on year.

Full cases – complaints already seen by insurers and handled by the office from start to finish – decreased by 12% as the Ombudsman encouraged complainants to first try to resolve their complaint directly with their insurer.

Most complained about insurance sectors

Previously, it was reported that a total of 9‚784 complaints were made against short-term insurers.

The top complaints were in motor insurance (48%), followed by homeowner insurance (18%); householder insurance (8%) and commercial insurance (7%). Other types of short-term insurance made up the other 19%.

When expressed in the number of complaints across both short and long-term insurance, the most complained about sector is motoring:

# Sector Type Complaints (rounded)
1 Motor insurance STI 4 700
2 Funeral insurance LTI 3 430
3 Life insurance LTI 3 040
4 Other long-term insurance LTI 1 990
5 Other short-term insurance STI 1 860
6 Homeowner insurance STI 1 760
7 Health insurance STI 1 350
8 Household insurance STI 780
9 Commercial insurance STI 685

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This is the most complained-about insurance sector in South Africa