The most complained-about short-term insurers in South Africa

Update: The article has been updated with corrected information for SAFIRE Insurance and New National Assurance. Data captured in the OSTI report led to inconsistent data which has been corrected. The OSTI has acknowledged the error. Additional information on overturn rates has been added.


The office of the Ombudsman for Short-term Insurance (OSTI) has published its annual report for 2020, showing which insurance companies in South Africa drew the most complaints last year.

Edite Teixeira-Mckinon, chief executive officer of the OSTI, said that the office recorded a monetary benefit of R119.5 million to consumers who approached its office for assistance in 2020.

The office registered 11,095 new complaints, 7% more than in 2019, and closed 10,805 complaints, 17.9% more than in 2019.

Of all the complaints registered in 2020, 786 complaints related to Covid-19, with 562 relating to business interruption insurance, and 224 to travel insurance. Covid-19-related complaints comprised 7% of all the complaints registered in 2020.

Of the 10,805 finalised complaints, the majority, at 36%, related to motor vehicle disputes. This was followed by homeowners’/building disputes at 21%, commercial at 14%, and household contents at 5%. The balance of 24% related to other types of cover and general policy queries.

The complaint trends for OSTI in 2020 were influenced, in part, by the nationwide lockdown and government regulations set to combat the spread of the Coronavirus, it said.

For instance, the number of motor vehicle-related complaints was 12% lower than in 2019. Commercial complaints increased by 5%, with the majority relating to business interruption claims.

“Some of the business interruption complaints were submitted in circumstances where the insureds enjoyed the extended business interruption cover for infectious/contagious diseases. The issue was mainly whether the direct cause of the business interruption was the government-imposed lockdown or Covid-19. Legal certainty on the question of causation was sought,” the ombud said.

The outcome of Covid-19-related business interruption claims submitted in 2020 are now being considered by insurers based on court decisions.

Teixeira-Mckinon said that of the R119.5 million recorded monetary benefit to consumers, R5.5 million represents commercial offers that were made by insurers and accepted by complainants relating to business interruption claims.

These offers were made in terms of the interim payment relief arrangement between the industry and the Financial Sector Conduct Authority.

Most complaints

As with most ombudsman reports, the number of claims it receives about each company is reflective of that company’s client base. That is to say, a company with more clients is likely to have more claims directed to the OSTI, and the inverse is also true.

The report includes another metric to better gauge the scale of claims – a figure showing how many claims are received per 1,000 customers an insurer has.

Overall, the ombud tracked 9,604 claims from customers, representing 2.52 claims per 1,000 people who are insured with the listed groups. Of the 54 insurers listed, 22 had a claim rate higher than this.

Santam Structured Insurance had the highest claim rate of 15.5 claims per 1,000 people. Constantia Insurance, which had the highest number of claims overall, had a claim rate of 9.9 per 1,000 people.

There is also a marked difference between a claim, and a successful claim.

While an insurer like Standard Insurance may have received a relatively high number of claims (685), and carries a claim rate of 5.5 per 1,000 clients (double the industry rate), only 11% of the claims finalised by the ombudsman actually ended up in favour of, or with some benefit to the claimant.

Likewise, while Santam Structure Insurance may have the highest rate of claims going to the ombudsman, only 13% of the claims finalised by the OSTI were to the client’s benefit.

Using this measure, across all finalised claims in South Africa, 17% ended in favour of clients.

The table below outlines all the ombudsman’s findings, ordered by the claim rate. The percent of finalised claims in favour of clients is included for greater context.

Overturn rates

The OSTI noted that the overturn rates (claims finalised in favour of clients) shown are for personal lines claims only. It excludes commercial lines claims and complaints resolved on transfer (claims received by the ombud before going to insurers).

“If a high overturn rate is registered, this may, but not necessarily, indicate that the insurer is not treating its customers as fairly as it should,” it said.

“However, the overturn rate should be treated with considerable caution as a high overturn rate can also be indicative of a high degree of co-operation being received by OSTI from a particular insurer in resolving a complaint to the satisfaction of the customer.”

The rates below include both circumstances covered by the OSTI – where claims were finalised in favour of the client through conciliation with the insurer, and as a result of ombud action.

 

* OSTI report records claims overturned in favour of clients, but provides no overturn rate

The full ombud report is embedded below.


Read: These are the most complained-about banks in South Africa

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The most complained-about short-term insurers in South Africa