A total of 723 complaints were received by South Africa’s Ombudsman for Long-Term Insurance (OLTI) were against Old Mutual’s South African unit, 80% of which were resolved in favour of the insurer.
Of the 469 complaints finalised against Old Mutual, 172 related to poor service, poor communications and/or documents or information not supplied.
A further 123 complaints relate to claims denied on the basis of policy terms or conditions not being recognised or met, of which 74.8% were finalised in favour of the company.
Overall, the ombudsman received 9,871 written requests for assistance, of which 34% related to life insurance.
Complaints handling
The ombudsman cautioned against viewing the percentages of complaints resolved wholly or partially in favour of either party.
She said that low percentages in favour of complainants does not necessarily reflect good complaints-handling processes by insurers, while high percentages do not necessarily mean that insurers handle complaints poorly.
“Some insurers are more inclined than others to settle matters. Such insurers choose to settle matters, either wholly or partially, when there may, strictly speaking, be doubt about legal liability,” said the report.
A large portion of the complaints were also made against South Africa’s largest insurance firms, including Hollard Life Assurance Company, Metropolitan Life and Sanlam Life.
Terrible policies
The ombudsman said the complaints highlighted “bad bargains” or products that do not deliver on their perceived promises.
This includes investment policies where the costs on these policies are too high.
In one example, some policies where the charges amount to up to 33% of the premium or where the reduction in yield was illustrated as 10% which reflects the impact of costs on the return of the investment.
The chances of a policyholder getting a real return on such a policy are slim, said the ombudsman.
Poor insurer behaviour
The report also said that poor insurer behaviour was making the Ombudsman’s role difficult, including when the insurer is “evidently/demonstrably looking for reasons not to pay what appears to be a valid claim”.
Many insurers also exhibited poor claims handling, poor underwriting practices and often act unreasonably, added the Ombudsman.
“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,” highlights the report.
