Ombudsman swamped by complaints amid Covid-19 insurance claims delays

The Office of the Ombudsman for Long-term Insurance (OLTI) says it has been swamped by complaints related to Covid-19 insurance claims in the first six months of the year and expects cases to continue to rise.

The group said it experienced a 48% increase in complaints in the first half of 2021 compared to the same period in 2020, driven largely by the second wave of Covid-19, which peaked at the end of 2020 and led to a surge in insurance claims in the early months of 2021.

Deputy Ombudsman for Long-term Insurance, Denise Gabriels, said that many of the complaints received by the office were not for claims being rejected, but rather that they were taking too long to process, or the process was delayed.

There were 8,300 requests for assistance in the first half of 2021 compared to 5,606 during the same period last year. There were 4,205 chargeable complaints (2,844 in 2020). A total of 1,929 cases were finalised (1,834 in 2020). 93% of cases were finalised within six months (90%). The OLTI recovered R77.9 million for complainants.

Gabriels said the increased deaths during the second wave of Covid-19 led to the rise in complaints relating to funeral claims.

This was corroborated by insurers themselves, who reported a significant increase in claims over the period.

Listed insurance provider Liberty Holdings pointed to a massive jump in claims on Wednesday (4 August), when it reported interim financial results for the six months ended June 2021

It said that total death and disability claims paid during the period amounted to R8.5 billion, a 61.4% increase over the first half of 2020. This, it said “is reflective of the severe impact of the pandemic on our clients”.

Gabriels said that some funeral insurers experienced a substantial increase in claims during the December/January holiday period when staff members were on leave. This resulted in instances of poor claims handling and delays, which in turn led to complaints to the OLTI, she said.

Complaints in the lapsing category were higher in 2021 than in 2020 as policyholders struggled to pay premiums under very difficult economic circumstances.

“A surprising phenomenon is that, of the complaints finalised, the percentage of the claims declined category had reduced (44.95% in 2021 and 50.66% in 2020).

“Many of the complaints in the poor service category (58.2%) related to claims, where the insurer had not declined the claim, but the complaint was about the claims process which was often delayed,” Gabriels said.

Around three quarters (74%) of the chargeable complaints, i.e. 3,126 complaints received in 2021, were transferred. These were complaints transferred by the OLTI to insurers to try and resolve directly with the complainants.

Gabriels warned that, while it is difficult to predict what will happen for the rest of the year, the third wave of Covid-19 experienced in July and August is likely to have an impact on the number of complaints in the months ahead.

Read: Unvaccinated South Africans could be charged more for insurance: Discovery Life

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Ombudsman swamped by complaints amid Covid-19 insurance claims delays