A new report on the short-term insurance industry may provide customers with another way with which to judge service providers: by looking at how many times their existing customers have complained.
For the first time ever, the industry ombudsman has released the number of complaints it received about each insurance provider.
Based on statistics provided by the Financial Services Board, it calculated the number of complaints referred to the ombud out of every thousand claims received by the insurer.
The results, which only looked at personal lines, showed a vast continuum.
Companies with the lowest complaints ratios were Guardrisk Insurance, Monarch Insurance, Indequity Specialised Insurance, JDG Micro, Shoprite and Unitrans.
Companies with the highest complaint ratios were AIG and Oakhurst, but the findings were not as straightforward as that.
Complaint ratios
Some companies had low complaint ratios but high “overturn” figures.
Dennis Jooste, the short-term insurance ombudsman, said in his notes that the two figures should be considered concurrently.
“The overturn rate is an indicator that the decision of the insurer with respect to a complaint was changed in some respect by [the ombud’s office] with some benefit to the insured,” he wrote.
“If a high overturn rate is registered against a particular insurer, this may, but not necessarily, indicate that the insurer is not treating its customers fairly.”
The rate could also be indicative of a high degree of co-operation from an insurer working with the ombudsman to resolve a complaint to the satisfaction of the customer, he said.
Shoprite, Unitrans and Indequity had 1:1 000 complaint ratios and low overturn rates of 8%, 11% and 20% respectively. However, their number of claims was also relatively low, with Shoprite’s 9 700 being the highest of the three.
Number of claims
Monarch and JDG Micro also had a 1:1 000 ratio, but both companies had significantly higher overturn rates, 57% and 64% respectively. They also had a higher numbers of claims.
Guardrisk was the only company that had processed more than 100 000 claims and kept the ratio of ombud complaints to 1:1 000. But, the overturn rate for its 148 000 claims processed was 48%, meaning that the ombud “changed” almost half of the decisions that the company had made regarding clients.
However, Kevin Eales, managing executive of the company, said the rate was evidence of a “good level of co-operation and agreement” on matters referred by the ombud.
Guardrisk’s products are mainly handled by intermediaries and, according to Miway Insurance, which received five complaints out of 1 000, direct insurers such as Miway itself, receive more complaints than those companies that have brokers to mediate.
Miway said that the relatively low overturn rate on its 64 000 claims processed reflected the company’s fairness.
“The ombudsman agreed with our decisions on claims 78% of the time, compared to the lower 63% industry average,” said Max Huggins, head of claims at Miway.
“This means that we continue to deal with claims fairly and in keeping with the consumer’s best interests.”
Reputational risk
And, where possible, Miway tried to find in favour of the client, said Huggins.
“We are mindful that claim rejections carry a reputational risk.”
Only two companies were recorded as having 30 or more complaints per 1 000 claims. Chartis (now AIG Insurance South Africa) was one of them, with a 30:1 000 ratio, and an overturn rate of 39%.
However, AIG South Africa’s country claims manager, Ahmed Lofty, said that “the assumptions made by the [ombud] to arrive at the complaint to claims ratio are incorrect.”
Using their own statistics and calculations, AIG’s complaints ratio was 2.4:1 000 complaints and its overturn rate 17.9% — “well below the industry average”, said Lofty.
The highest complaints ratio went to George-based Oakhurst Insurance, with a ratio of 37:1 000.
But, according Oakhurst’s group legal adviser, Naresh Tulsie, the report says the company received 5 771 claims when in fact it had received 10 771.
“If the correct numbers had been used, we would have been in the median range,” he said.
The company had also co-operated well with the ombud, he said of its 32% overturn rate.
The deputy ombudsman Edite Teixeira-Mckinon said the report was based on claims figures that the insurers themselves had supplied to the Financial Services Board.
“Prior to publishing the statistics, the information was also made available to the insurers to verify,” she said.