The most complained about life insurers in South Africa

The office of the Ombudsman for Long Term Insurers (OLTI) has published its annual report for 2021, showing which life and other long-term insurers have drawn the most complaints from policyholders over the last year.

For the 2021 review period, the ombud received 17,379 requests for assistance, a 22% increase from 14,198 requests it received in 2020, and the highest number of requests for assistance ever.

The ombud said that 8,163 of the requests translated into chargeable complaints which were accepted by the office for further consideration – this was an increase of 1,407 requests from 2020.

“Covid-19 had a significant impact on the number of insurance claims and insurers’ administration of claims and this is also reflected in the increase in complaints,” the ombud said. Over 6,000 other cases were not applicable to the OLTI and were transferred to other ombud services.

Complaints relating to funeral and credit life benefits increased the most over the period.

“This is not surprising given the increase in deaths at the end of 2020 and in 2021 due to Covid-19 as well as the increase in retrenchments and loss of income claims due to Covid-19,” the ombud said. “What is perhaps surprising is the decrease in the number of complaints about Disability and Health benefits.”

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Overall 3,899 cases were finalised in 2021, 34% of which were overturned with whole or partial benefit in favour of the complainant. If transferred cases settled in favour of complainants are added in, then the percentage increases to 41.21%.

The ombud said that over R200 million was recovered for complainants in the form of lump sums. This figure does not reflect the value of all benefits awarded in favour of complainants, such as recurring income or instalment benefits, annuities, the reinstatement of policies, etc.

The amount of compensation awarded to complainants because of poor service by an insurer, amounted to R950,000 in 195 complaints.

The most complained-about LT insurers

Unlike the Ombudsman for Short Term Insurers (OSTI), the OLTI does not include metrics like a complaint-to-client ratio to give a better idea of how complaints fit into the wider picture of the long term insurance market.

“Although there are a number of published reports reflecting market share in the long-term insurance industry, there is no single generally accepted measure for it and, therefore, this is not reflected in the published data,” the ombud said.

“Another reason for not including market share is that the office does not hold the underlying data that could be used to determine market share and this makes it impossible for the office to verify its correctness. The only context is the individual insurer’s complaints expressed as a percentage of the total complaints received,” it said.

Instead of focusing on complaint-to-client ratios, the OLTI includes information on the percentage of assessed complaints that are ultimately awarded with whole or partial benefit to complainants. However, this measure can be deceptive.

A large insurer with many clients will invariably draw more complaints than a smaller firm – but a smaller insurer with just a few complaints can ultimately be seen to have a worse overturn rate, simply because of the proportions being worked with.

For example:

  • A large insurer with 100 complaints, where 50 of those complaints were overturned in favour of customers, would deliver an overturn rate of 50%.
  • A small insurer with two complaints, where only one of these is overturned in favour of the customer, would also produce an overturn rate of 50%, giving the impression that the two insurers’ service levels are the same.

A fairer indication of the most complained-about insurers would be to look at the overturn rates among the insurers that also draw the most complaints overall.

Of the 51 long term life insurers covered by the OLTI, only 21 received more than 100 complaints. The table below lists these 21 insurers by the number of cases resolved in favour of complainants, giving a better indication of overturn rates among the most-complained about insurers.

For completeness of data, however, all the information is provided here.

51 long term life insurers, listed by total complaints received

51 long term life insurers, listed by percentage of complaints resolved in favour of complainants

Read: The most complained-about insurers in South Africa

Artmotion S.Africa

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