These are the most complained-about long term insurers in South Africa

The Ombudsman for Long-Term Insurers (OLTI) has published its annual report for 2020, showing which insurers had the most claims pushed through to the ombud for action.

Long-term insurers include providers of life cover, as well as health and disability cover. It includes funeral plans as well as credit life coverage, which features prominently in 2020 due to the pandemic.

The OLTI received 14,198 requests for assistance in 2020, with 6,756 chargeable complaints, while 3,624 full cases were finalised over the period.

The report pointed to 1,373 settled cases in favour of complainants, representing 32% of cases resolved. It recovered R177.9 million in lump sums.

The ombudsman recorded 456 complaints that were directly related to Covid-19 or to the lockdown during the year. The biggest portion of these (36%) were in respect of credit life benefits, very different from overall complaints where credit life benefits make up only 9% of cases.

“Claims for retrenchment and inability to earn an income caused the highest number of complaints, which is perhaps not surprising as the economy suffered, and these are also the more contentious claims,” it said.

“Given the impact of Covid-19 and the lockdown on employment and the economy, it is not surprising that there was an increase in complaints about retrenchment and loss of income benefits. These are events that are mostly covered by credit life policies.

“We have been and are dealing with some new and difficult issues generated by claims being declined and the resulting complaints. One such issue is whether an insurer is obliged to pay a claim for benefits related to an inability to earn an income when an insured receives Temporary Employee/Employer Relief Scheme/ TERS payments.

“The office has not finally determined on this aspect,” it said.

The biggest complaints directed at long term insurers revolved around poor communication, not supplying needed information, and the denial of claims. Claim denials made up half of all complaints, with poor communication accounting for 30% of complaints.

R177.9 million was recovered for complainants in the form of lump sums. This figure does not reflect the value of all benefits awarded in favour of complainants, such as recurring income or instalment benefits, annuities, the reinstatement of policies, etc.

The compensation awarded to complainants amounted to R817,970 in 208 cases as compared to the R874,286 in 190 cases in 2019.

Most complained about

As with the short-term insurers, the number of claims the ombudsman receives about each company is reflective of that company’s client base. A company with more clients is likely to have more claims directed to the OLTI, and the inverse is also true.

While an insurer may have received a relatively high number of claims, the number of cases finalised by the ombudsman in favour of, or with some benefit to the claimant may be low.

For example, Sanlam Life had 264 cases that were considered by the ombudsman – pointing to the scale of its market share. However, only 16% of these cases were eventually found to be in favour of the customer. This is compared to other large insurers where the rate is upwards of 50%.

This figure refers to the share of cases which were resolved wholly or partially in favour of the complainants. These cases are resolved by way of settlement, mediation, conciliation, recommendation or determination.

Because mediation and conciliation is part of this process, a high number may not necessarily reflect a large number of cases where insurers were overturned by the ombudsman, but may also indicate a high level of cooperation by insurers in the mediation process. The OLTI does not provide granular data on how these rulings were reached.

The table below outlines all the ombudsman’s findings, ordered by the percent of finalised claims in favour of clients. The number of cases considered and finalised by the ombud is included for greater context.

The full ombud report is embedded below.

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