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Judge Ron McLaren, the long-term insurance ombudsman, recovered R527 666 in compensation for consumers in the past year, while the short-term insurance ombudsman, Deanna Wood, recovered more than R100 million for consumers over the same period.
Poor communication on the part of insurers emerged as a common problem across the board. Wood noted that policy drafting by short-term insurance companies required attention.
“It is of utmost importance that insurance policies are drafted with clarity,” she said. “Too many policy documents contain unclear and ambiguous clauses that are difficult to understand and problematic to interpret.”
The problem of bad communication extended to the scripts used by direct insurers during recorded sales conversations. Wood explained that often the sales consultant, who followed a prescribed script, caused confusion in the mind of the consumer because of bad drafting of the script and bad presentation of the policy terms.
The poor communication problem carried through to the wording of travel insurance policies when it came to emergency situations.
“Compliance with policy terms in emergency situations is very often practically impossible for consumers who find themselves in a stressful situation, particularly when abroad,” said Wood.
Another issue that came up was related to cellphone insurance policies, especially when it came to consumers understanding the concept of a specified SIM card having to be used with a particular handset when a phone was lost.
McLaren, the long-term insurance ombudsman, reported that most of the complaints received by his office over the past year related to funeral insurance (35%) and life insurance (31%).
McLaren said that of the complaints he received, the most common related to declined claims, followed closely by poor communication complaints.
CASE STUDIES: YOU HAVE A
RESPONSIBILITY TO DISCLOSE RELEVANT INFORMATION
1. In the first complaint with the long-term insurance ombud, the complainant had a policy with the insurer with cover of R300 000. She disclosed in her application form that her mother had been diagnosed with breast cancer.
Although the insurer initially imposed a breast cancer exclusion, it later removed the exclusion after a request from the complainant.
On July 2 2013, the complainant applied for an increase in cover to R1.5 million, which was accepted by the insurer on July 22 2013, with an inception date of August 1 2013. However, on July 27 2013, the complainant went for genetic tests to establish whether she had a predisposition to developing breast cancer. She received positive test results on August 2 2013.
The complainant did not disclose she had undergone the test after the acceptance of the application, but before the new policy cover kicked in.
She then claimed a benefit after undergoing a risk-reducing bilateral mastectomy with reconstruction on November 22 2013. The insurer paid the claim under the initial amount of cover (R300 000), but declined the claim under the increased cover (R1.5 million).
The ombudsman made a provisional ruling, upholding the insurer’s decision on the basis that a reasonable person would have disclosed the information about undergoing the tests, even if the results were unknown.
The office then decided to hold a hearing, where it established that the complainant and her sister (who was also insured with the same insurer) had increased their cover prior to the genetic tests, but after making appointments for the tests.
It also transpired that the complainant had not disclosed in her application form for increased cover that her father had suffered from prostate cancer, which had occurred after the initial application but before the application for increased cover.
The insurer’s decision was upheld in a final ruling.
2. A complaint before the short-term insurance ombudsman related to damages to a car following an accident in the early hours of the morning. The insurance policy was purchased telephonically and the complainant stated that he had been insured since 2004.
He was specifically questioned about any claim incidents in the previous three years and did not reveal any information. However, during the claim process, the insurer found that the complainant had not had insurance cover since 2004 and did not have uninterrupted insurance cover for six months before taking out this insurance policy.
The claim was rejected and his was policy voided.
The ombudsman noted that the complainant had been ambiguous in his responses when taking out the cover and that the sales agent failed to clarify the information provided, nor did he explain to the complainant the importance of disclosing any breaks in insurance cover.
There was no proof that the complainant lied about his claims history to secure lower insurance premiums.
