IconAdministration Outsourcing
IconAsset Managers
IconAssociations & Institutes
IconBBBEE Consulting and Verification Agencies
IconBusiness Chambers
IconBusiness Process Management
IconBusiness Process Outsourcing
IconConsumer Protection
IconCorporate Governance
IconCredit Bureaus
IconDebit Order Collection Facilities
IconEducation and Training
IconHuman Resources
IconInformation Technology and Software Partners
IconInvestment Consulting
IconInvestment Fund Managers
IconListed Equities
IconParticipation Bond Managers
IconPolicy Administration
IconPolicy Trading
IconProperty Unit Trusts (PUTS)
IconRegulatory Authorities
IconStock Exchange
IconSurveys and Research
IconTraining Courses & Workshops
IconUnit Trust Fund Managers
IconWellness Programs
  Subscribe To »

What keeps the LT Ombudsman awake at night? Part 2







Following on from Part 1.

From the Long-term Ombud’s 2016 annual report:

The Assessors and Adjudicators in the Long-term Ombud’s office were canvassed about the issues that currently fall into this category. Last week we discussed “Bad Bargains” and Complex Products”.

3. Complainant behaviour

The LT Ombud wrote about difficult complainants in the 2015 Annual Report on pages 24 and 25. This problem is not going to disappear and there have been several complaints in the last year that have taken on nightmarish dimensions precisely because of the unreasonable behaviour of complainants. The persistence of complainants impacts on productivity as more time has to be spent on such complaints. This is a growing trend. Persistency is measured by the percentage of complainants who reject the office’s provisional determinations where we then have to issue final determinations.

2008 – 0.8% of cases closed had final determinations issued;

2012 – 5.8%;

2016 – 10%.

4. Insurer behaviour

  • Insurer behaviour that suggests that a claim is being avoided at all costs. This is where the insurer is evidently/demonstrably looking for reasons not to pay what appears to be a valid claim, often by raising a new defence if the original reason for declining a claim does not succeed.
  • Insurers that act unreasonably. E.g. expecting a claimant to provide information to prove an exclusion on which the insurer wishes to rely to decline a claim instead of the insurer obtaining the information itself. Insurers expecting claimants to undergo surgical procedures or electroconvulsive therapy when considering disability claims, in the absence of policy wording requiring such treatment.
  • Insurers that have poor underwriting practices by, for instance, not conducting proper investigations at underwriting stage, but then relying on a nondisclosure defence to repudiate the policy when a claim arises. This involves the practice of “shutting the eyes to the light” at application stage.
  • Poor claims handling by insurers.
  • The attitude of some insurers, after all these years, to our equity/fairness jurisdiction; they shy away from the very concept, yet they themselves make so called “ex gratia” or “goodwill” payments. These payments are probably based on grounds that are not that different from our concept of equity/fairness. This attitude to equity/fairness is difficult to reconcile with the TCF (Treating Consumers Fairly) approach which has been introduced by the Financial Services Board.

5. Systemic issues

These are complaints that have a wider impact than the complaints in our office. These are difficult complaints to resolve precisely because of their wider impact. The impact that a decision in a single case in our office might have on the whole portfolio of policies complicates the issue. The report quotes the following example

An insurer sells policies that provide cover for people who are HIV positive. The life assuredis accepted at application stage but then has to complete an underwriting process within three months. If the insured fails the underwriting process, usually because his/her CD4 count is below the cut-off count, only accidental cover is granted, but the premium remains the same.

The insurer’s motivation for this practice of not reducing the premium was that the insured may qualify for full cover (i.e. cover for claims arising from natural causes as well as accidents) in the future. Their systems could also not accommodate such transitions between accidental and full cover.

Our office was of the view that this practice was not acceptable. The insurer has subsequently agreed to change its practice and reduce the premium if the cover is limited to only accidental causes. They have also implemented additional measures to ensure that both the insured and the premium payer (if it is a different person) are aware that the cover is limited to accidental cover.

This was also evidenced by outrageous deductions in respect of causal event penalties. When a complaint was made, the mistake was rectified, but apparently not the system. This was only done after intervention in the form of a guidance note by the Regulator – editor.

Source: Paul Kruger: Moonstone Compliance (Pty) Ltd
« Back to previous page Print this page » |

Breaking News »

Repo rate remains unchanged at 6.75%

The Reserve Bank on Thursday kept the repo rate unchanged at 6. 75% per annum, Reserve Bank Governor Lesetja Kganyago said. “The Monetary Policy Committee (MPC) has decided that it would be prudent to maintain ...
Read More »


Facing SA’s fiscal failure

            Arthur Kamp, economist at Sanlam Investments                   Cape ...
Read More »


Zimbabwe: So Long Robert Mugabe

By Coface, the international trade credit insurance company     On November 21st, after 37 years as Zimbabwe strongman Robert Mugabe, 93 years old, resigned from the presidency. Mr Mugabe’s ...
Read More »


African mine victims entitled to sue holding company in the UK

    Patrick Bracher, Director Norton Rose Fulbright South Africa Inc.       The English Court of Appeal has allowed Zambian citizens from the Copperbelt ...
Read More »


More News »


Healthcare »


Life »


Retirement »


Short-term »

Advertise Here
Advertise Here

From The Glossary »


Fire Wall:

Wall separating parts of a building to contain the spread of a fire.
More Definitions »

By using this website you agree to the Terms of Use.
Copyright © Stoker Risk & ICT (Pty) Ltd 2004 - 2017.
All Rights Reserved.





Contact IG


Media Pack


RSS Feeds