LTI Report 2008

The Office of the Ombudsman for Long-term Insurance provides out-of-court resolution of disputes between complainants and insurers fairly, quickly and informally.  This service is free for consumers and rulings are legally binding on insurers.

Here are some of the key statistics from their 2008 report:

Complaints
Of the 8 290 complaints received by the LTI Ombud’s Office in 2008: 4 764 were full cases, 2 563 were mini cases (in other words those resolved with minimum input, for example, where a policyholder has requested the insurer to change his beneficiary details on numerous occasions, but the insurer has not complied and makes the change only after the office takes it up), 763 cases were transferred to insurers to deal with directly and 200 were out of scope - some of these fall under the jurisdiction of other ombudsmen and are transferred to them.

There was a 4.6% increase in the number of complaints received from 2007 to 2008 (7 923 cases in 2007).  The significant increase in the number of cases only happened in the last quarter of 2008, largely as a result of the adverse economic conditions that consumers have had to endure since the beginning of last year.

Complaint categories that have decreased substantially are “Dissatisfaction with Policy Performance”, a result of the strong equity markets up until 2008, and “Misselling” (inappropriate advice by an intermediary that results in the sale of a policy), because of the establishment of the Office of the Ombud for Financial Services Providers (FAIS Ombud) who has jurisdiction over all complaints arising from advice given on or after 1 October 2004.

Cases Finalised
Just over half of the complaints finalised last year came from the “claims declined” category.  The office improved its turnaround times, with 87% of complaints finalised within six months in 2008 (compared to 84% in 2007).  This is particularly impressive as there was an increase in the number of “Disability cases” and these tend to take longer to resolve than the other classes of assurance.

44% of claims were resolved wholly or partially in favour of consumers in 2008 (the same as in 2006 and 2007). The majority of these resolutions were achieved by mediated settlements.  In 2008 the office recovered more than R72 million in benefits for consumers (excluding compensation payments and income disability benefits).

Expenditure
The cost per case charged to insurers over the past three years has been:
2006     R1 249
2007     R1 530
2008     R1 530

The actual expenditure of the office over the past three years has been:
2006     R8 219 000
2007     R8 782 000
2008     R8 433 000

The total expenditure is recovered each year from the office’s subscribing members.  Each member contributes according to the number of cases against it received by the office.

Summary of the 2008 statistics:
• 97% of all registered insurers based on asset value subscribe to the scheme.  This ensures that almost all complaints can be dealt with by the LTI Ombud’s office.
• The office improved its turnaround times: 87% of complaints were finalised within six months (a 3% increase from 2007).
• 52% of these cases were finalised within 60 days.
• 44% of claims were resolved wholly or partially in favour of consumers.
• The office recovered more than R72 million in benefits for consumers.

In closing, it is relevant to quote the Long-Term Insurance Ombud, Judge Brian Galgut, who highlights the value of cost effective complaint solutions: “Because of the legal cost involved our courts are unfortunately beyond the reach of most consumers, and the delays in getting cases heard in court add to the problem.  Any organisation that contributes, at little or no cost, to the resolution of a complaint raised by a consumer, whether by itself dealing with the complaint or by referring it to an organisation or ombud scheme with jurisdiction, therefore provides a vital consumer service.  In any event third party services such as getclosure.co.za inevitably result in the public being made aware of the existence of an ombud scheme such as mine, which is obviously to the benefit of consumers generally and therefore of vital importance to ombud schemes.”