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Insurance complaints

The first thing most people think about when they see insurance is high premiums and denied claims. This is evident in the respective ombudsman’s reports for 2017. The long-term insurance ombud report indicated that nearly half of the complaints they received were denied claim disputes. Similarly, the majority of the short-term insurance ombud’s most complained about category, i.e. motor vehicle claims, consisted of disputes of claims rejected due to drunk driving. But unlike long-term insurance, customer service issues also made up a considerable number of complaints in the short-term insurance industry.

Unless provided for in the Short-term and Long-term Insurance Act’s, you are still fully protected by the Consumer Protection Act and are entitled to the best service your insurer can offer at all times.


Insurance policy schedule

The insurance policy schedule is part and parcel of your contract with your insurer and it is also binding if you accept its contents as is. Reading and understanding your policy schedule is crucial to make sure you are actually covered for the risks you want cover for.

What is in my insurance policy schedule?

A typical schedule includes but isn’t limited to the following sections:

Policyholder information: This section, which is usually the first item you’ll see in your schedule, contains all of your information and general details regarding your policy.

Cover summary: If you have taken out a bundled policy which is made up of different insurance types like car, home contents and portable possessions cover, your insurer will list all of those with the total insured value for each cover and the total premium you’ll be paying.

This section may also include the date on which your premium is due and your payment details. It is very important that these are correct and that you are aware of the payment date to avoid a ‘no payment, no cover’ situation.

Policy benefits: This section further breaks down each of the elements of your total premium or insurance package and details everything you are and aren’t covered for.

What to look out for:

For car insurance, it is important that you understand the value (retail or market) at which your car is insured.

  • Retail value: This is how much a dealer would sell your car for, i.e. as close to the replacement cost of your car as you can get. Most insurers recommend insuring your car at its retail value because should it ever be written-off or stolen and never recovered, the payout is most likely to replace you car with something of similar worth when you took out the policy.
  • Market value: Generally, this will be lower than the retail value. This is the price at which you are most likely to sell your car at taking into consideration factors like its mileage and condition. While ensuring your car at market value will ensure a lower premium, the payout will also be lower.

It is also always vital to to check the insured value for all your assets.

Optional/additional cover details: Make sure you read through what you are covered for and what you chose to exclude to avoid any confusion when it is time to claim. Examples of such cover could include radio/accessory cover for car insurance and landslide cover for home insurance.

Resolver tip: If any of your or your insured valuables/assets’ details change, inform your insurer about them so they are able to reassess your risk profile.

Disclosure and other conditions: In this section, you should find all the details that you provided relating to the risk you are covered for like the physical description of your house or car and whether or not you have submitted a claim before. These are also the factors that were used to determine your premium. Any other special conditions or claim exclusions will also be listed here.


Excess

The ‘excess summary’ in your policy schedule details the excess you will have to pay as well as, if any, the circumstances under which you will be liable for an additional excess.

What is an excess?

This is the amount you will have to pay should you claim from your insurer. This amount can vary depending on the circumstance of the claim. For example, if you are the regular driver of the vehicle your excess amount payable will be lower than if someone other than yourself had an accident with your car. The excess for the non-regular driver or someone under the age of 25 years old could be more so ensure you check if there are any differences.

Generally it is possible to decide your own excess, but if you choose to have a lower excess, your premium will most probably be more expensive and vice versa.

Can I choose how much I want my excess to be?

While many insurance companies have a standard excess, some may give you the option to increase or decrease the amount. Remember that you will need to have this cash available in the event of a claim so insure you have put this money aside should you need to claim.


The information in my policy is incorrect

If you pick up on any information that is incorrect in any policy documentation, you should contact the insurer at the soonest and communicate the error as well as provide them with the correct information. Remember to check that the information has indeed been updated.

How do I correct or update the details in my policy?

If any of your personal details change, you should see to it that you inform your insurer of the change so your details can be updated accordingly and a case of material non-disclosure can be avoided.

If you pick up on any personal details that are incorrect in any policy documentation, you should contact your insurer at the soonest and communicate the error as well as the correct information. Remember to check that the information has indeed been updated or changed thereafter.

I don’t have a copy of my short-term insurance policy!

When you purchase a short-term insurance policy, within 30 days after the purchase your broker or insurer must provide you with a copy of your policy document or a document that informs you of your contract of insurance. It is unlikely that your insurer or broker would not send you one, but if you do not have a copy of your policy, ask your insurer or broker to send it to you.

My insurance didn’t sent me a summary of my long-term policy!

Your insurer must provide you with information about your policy in the form of a summary which must include your premium and all policy benefits. It should also set out any relevant exclusions - i.e. in what circumstance the benefits will be paid or not be paid. This summary can be presented to you in paper form or electronically depending on your preference and on the insurer, and you should receive it within 60 days after you bought the policy. If you still haven’t received the summary, contact your broker or insurer and find out what the hold up is.

My insurance broker has asked me to sign insurance documents that are blank or incomplete

It is a trap and you know it - abort mission. Make sure that you don't ever sign any insurance documents that are blank or incomplete. Your insurance company or broker is not allowed to make you sign blank or incomplete insurance forms or documents. If you have been asked to do so, lodge a complaint with your insurance company immediately.


Rejected insurance claims

I don’t know why my claim was rejected!

Most insurers will tell you why your claim was denied or why they could only pay for a portion of the damage. On the odd occasion that you don’t receive reasons as to why it was denied, you are entitled to ask for those in writing.

My car insurer rejected my claim on the basis of recklessness and I think it is unfair! What should I do?

The first thing is to find out exactly why. Whenever an insurer rejects your claim they must give you their reasons in writing. This should lay out all the findings that lead to the conclusion that you acted recklessly.

The next step is to review your policy, especially if your car is linked to a vehicle tracking device that monitors your driving. Check for any clauses that may exclude certain circumstances. For instance, some insurers will check the tracker for your speed shortly before and at the time of the accident and if it exceeds a certain limit (usually the area speed limit), your claim will not be paid out.

I think my claim was unfairly rejected, what can I do?

If, after reviewing the reasons for rejection and your policy benefits and conditions, you feel your claim was unfairly denied or that the policy wasn’t clear enough, you should first take this up with the insurance company in question using Resolver.

If you are still not happy with the outcome, we will help you escalate your complaint to the relevant ombud.

Is it possible for my homeowners insurance policy not to include flood damage?

Yes. Depending on the company you are insured with, they will typically cover you for damage caused by fire and theft and have additional cover for natural disasters, like floods.

There are three common instances that can explain why your claim was denied:

  • Your policy doesn't cover the risk of natural disasters. This means your insurer offers flood or storm damage cover as a stand alone or elective risk, i.e. it is not bundled with other risks like theft and fire damage, you have to add it onto your policy.
  • Upon assessment, your insurer found that the structure that was damaged by the storm hadn't been properly maintained. Depending on the degree of negligence', they may only pay a portion of the total damage.
  • You were claiming for the loss of your furniture and electronic devices after a flood. Even though you may actually be covered for flood damage, your contents may not be insured. Take note that home contents insurance is different to home insurance or building insurance.

Always read your policy and understand exactly what you are covered for. Don't assume certain risks are included.

Why does my insurer want to pay me a lesser settlement?

If your insurer proposes a settlement that you feel is too low, you are entitled to find out why. They must give you written reasons for paying you a lesser amount than you claimed. Remember, you don’t have to agree with these reasons and have every right to dispute the proposed settlement if you believe your claim was handled unfairly.

Material non-disclosure

The insurance ombuds overturn many cases of disputed claims every year. However, in the cases where the insurer’s decision to reject a claim was upheld, it was found that there was some level of non-disclosure on the part of the the consumer. Misrepresentation by policyholders is especially common in the short-term insurance industry.

Whether you do it to improve your chances of being granted a policy or to get covered for a lower premium - failing to disclose certain information to your insurer may not only result in your claim being denied and your entire policy being cancelled, but you could also be reported to the Police for fraud.

Honesty is the best policy

Before an insurer can provide you with insurance, you will be asked to provide information that will be used to assess your risk and determine your premium and/or whether or not your policy should be provided with special conditions. This is usually done using a questionnaire.

You have a responsibility to provide accurate information when you apply for insurance. Being dishonest or omitting to mention a piece of information when answering the questionnaire could be the difference between a successful and a denied claim.

Why should I track my insurance history?

An important aspect of assessing your risk has a lot to do with both your insurance history and the particular details of the possession you are seeking cover for. For instance, you will be asked to provide information relating to any previously denied and settled claims or significant damage that occurred to your car or house.

Always keep track of any accidents you are involved in and any claims you submit so that when the time comes, you are able to provide information that is correct.

Do I have a duty to disclose anything else if I told the truth in the beginning?

Your responsibility to provide accurate information remains as long as you are a policyholder.

Material changes: If for instance, the regular driver of the insured car changes or you remove the alarm system in your house, you must inform your insurer. This is because such information could affect your risk profile and will be key in the assessment of any claims you submit subsequent to the changes.

When you do submit a claim to your insurer, be honest about the circumstances surrounding the loss or damage. If there are any discrepancies in your recollection of the event, this could lead to a rejected claim.

Insurance companies investigate all claims before paying any monies out. This includes taking another look at the information you supplied when you took out the policy. And if you are caught in a lie, you will be sitting with a lot of expenses and no pay out... or policy for that matter.

Can I find cover after failing to disclose information to my insurer?

Yes, you can, but remember - if your policy is cancelled because you were dishonest or failed to disclose certain information, it will be considered as a dent in your risk profile and decrease your chances of finding affordable cover in the future.

Will my insurer pay out if I misrepresented or omitted material information by mistake?

Unfortunately, misrepresentation of information for purposes of insurance is not qualified or disqualified by whether or not you did it intentionally. It is always better to disclose to your insurer if you provide information based on an estimation. However, this doesn’t mean you will get away with distorting information for a better deal. If you had three accidents in the last 5 years, it is reasonable for your insurer to expect you to recall all three. Saying you only recall one won’t fly as an estimate.

Duty of disclosure - car insurance

Mr Ngwane bought his 21 year old daughter Mvelo a car and insured it with CarINS in 2016. Unfortunately, Mvelo was involved in a car accident that left the vehicle damaged beyond repair. Mr Ngwane submitted a claim but it was denied because he failed to disclose that Mvelo had been in two previous car accidents. Furthermore, it was discovered that Mvelo was not listed as the regular driver of the vehicle. Mr Ngwane doesn’t agree with this decision and believes his rights were violated.

What does the short-term Insurance Act say?

Both the insurer and Mr Ngwane have a duty of disclosure.

The Act clearly states that a contract of insurance can be voided if the policy-holder misrepresents or fails to disclose information that influences the insurer assessment of the risk (i.e. the determination of the premium.) Mr Ngwane can’t conclude that the previous accidents aren’t material to his daughter’s risk profile. Generally, younger drivers pay a higher premium as they are considered a higher risk. Insurers also use your accident and claims history to assess your risk profile. Therefore, failure to disclose such information gives the insurer legal grounds to deny a claim.


Premiums

Everybody knows - premiums are a pain to pay. More so when they seem to increase overnight, with no apparent reason!

My monthly premium is unreasonable

Most insurance companies will have a standard premium subject to you meeting some requirements. If you don’t meet those requirements, a premium will be determined for you taking into account your risk profile. If you are quoted an unreasonably high premium, you should look into reducing the risk of your home for instance, say by installing an alarm system, burglar bars or hiring a security guard - all of these make it less likely that your house could be burgled and may lower the actual premium you wind up paying. Opting for a higher excess may also help lower your premiums.

Remember, you are entitled to shop around for better rates - it is advisable that you don’t just focus on one company but rather get a quote from other companies or make use of a home insurance quote comparison tool or website to ensure you get the best cover that you can afford.

I missed my premium payment, what now?

Most insurance companies will ask you to setup a debit order payment so that your premiums are deducted directly from your bank account. If you fail to pay your premium on its due date, you will be entitled to a minimum grace period of 15 days, which may be longer depending on your policy and insurer. If you fail to make the outstanding payment, your policy may lapse or be terminated and any claim you make could be refused.

While some companies may inform you if the due date passes and they haven’t received your premium, the onus is on you to check your bank statements and make sure the payment was indeed made, in this case, ignorance is certainly not bliss - always make sure your premium payments are up-to-date all the time!

Why has my premium increased?

There are a number of reasons that can explain why your premium has increased.

Excess: If you choose to lower your excess at any given time, your premium will most likely increase. Similarly, electing to pay a higher excess will help reduce your premium.

Claim frequency: Depending on your insurer, the more you claim, the more likely it is that your premium will be increased when you renew your policy. In addition, the severity of the accidents you are involved in or the loss you suffer and your level of responsibility or negligence (outcome of the assessment of the incidents) will play a part in the upward adjustment.

Changes in your details: If the regular driver of your car changes or you move to a busier area for instance, your premium might change because these factors will affect your risk profile. For instance, younger drivers are considered to have a higher risk profile and thus pay a higher premium.

Car/home safety: Although it is unlikely, but if you were to remove your car’s tracking device or immobiliser, or if, unlike your previous residence, your new house doesn’t have a locked garage and a security gate or burglar bars, your insurer may increase your premium.

How can my car insurance premium increase while the value of my car decreases annually?

It’s a contentious issue as to whether your premiums should be increasing if your car value is decreasing. Some would argue that the cost to your insurer, taking into account factors like inflation, may actually be increasing every year, irrespective of the total value of your car. The cost of replacing a bumper or any other car part is the same for a brand new car and a five year old car. However there is no hard and fast rule here! The amount that you will be paid out for your car insured at retail value will decrease from one year to the next so there is no reason why you shouldn’t contact your insurer and see if you can renegotiate your premium.

What are my options after a premium increase?

  • Contact your insurer and negotiate. Most insurers are open to negotiating a lower increase in your premium. But this may require you to, for example, increase your excess.
  • Lodge a formal complaint. Sometimes your premium increase is a matter of a technical error. If you don’t agree with the adjustment to your premium, enquire about it with your insurer. You should be refunded the difference if it turns out to be an error.
  • Improve your car or home safety. Install a tracking device in your car if you don’t have one or upgrade your current device, and insert an alarm system in your house or additional security doors where possible.
  • Remove added benefits from your cover. Additional benefits like car hire for car insurance may not be a need for you. However, it will disadvantage you if you damaged your car and needed to get around.
  • Shop around for a better deal. If you can find better cover, you should move house. However, sometimes a long-standing relationship with your insurer may help you with future negotiations.


How the economy and legislation impact your premium

When insurers incur increasing costs, they try to pass some of those costs onto consumers. The floods and storms we experienced this year may have increased the number of claims received by insurers. Meaning they had to pay out a lot more money than anticipated. For example, many people’s cars were damaged by flash floods and had to be written-off. The replacement cost of car parts of these damaged vehicles and other insured items that were swept away would also be higher because of the VAT hike. To recoup some of these funds, the cost is spread across consumers’ either immediately or put off and charged as a renewal premium.

Similarly, when new stricter legislation is introduced, insurers sometimes incur compliance costs. For instance if new legislation requires insurers to cover you for a longer period after the cancellation of your policy then your risk profile is affected as the possibility of claiming increases. And as we’ve highlighted, a higher risk equals a higher premium.


Credit life insurance

Credit life insurance regulations introduced

New credit life regulations (s171) were added to the National Credit Act in 2017 and now prescribe limitations on the cost and cover of credit life insurance.

The introduction of the regulations came as a much needed relief to consumers, putting an end to insurers exploiting those purchasing credit products and facilities

What is credit life insurance?

Credit life insurance is put in place by companies that sell credit products as a way for them to be able to recover their money in the unfortunate event that you become temporarily or permanently disabled, critically ill, lose your job or you die. You pay premiums just as you would with other insurance products and should any of the above occur, the payments will be worked into your debt repayment, either to pay off your debt in full or settle a portion of it.

How do I know I was mis-sold credit life insurance?

In the past few years, some well-known names in the retail industry have been taken to task by the National Consumer Tribunal for selling loss of employment credit cover to pensioners and self-employed consumers. Retrenchment for pensioners doesn’t quite sound right… does it?

In 2017, a new set of credit life regulations were drawn up and added to the National Credit Act (section 171) by Minister of Trade and Industry Rob Davies. The Act now sets out the following instances of credit life mis-selling:

  • You were unemployed or self-employed at the time you took out the policy but a cost related to the risk of unemployment/retrenchment was included.
  • You are a pensioner and your policy includes a cost for the risk of occupational disability and/or unemployment.
  • You were told that you have to take out the credit life policy with the bank in order for them to grant you a loan rather than being able to choose your preferred credit life insurer.

If you think your credit life insurance policy was mis-sold to you, you can lodge a formal complaint on Resolver.

Limitations on the cost of credit life

For mortgage agreements exceeding R450 000, insurers can charge you a maximum of R2 per R1000 of the amount owing. This is the same for ‘affordable mortgage agreements’ (principal amount is less or equal to R450 000) for individuals below the age of 55. For those older than 55, R2,50 per R1000 will apply as the premium ceiling.

Credit facilities and all other credit agreements are subject to a maximum premium of R4,50 per R1000.

When will my credit insurer not pay out?

Some of the top exceptions include death resulting from the use of drugs, suicide, military obligations and unemployment or loss of income that results from lawful dismissal due to misconduct, participation in unprotected strike action and resignation.


Customer services

As a policyholder and client you are entitled to quality service - you would be well-within your rights to demand high quality of workmanship and timely performance and completion of services from your insurer.

The customer care consultant can’t or won’t help me

If you encounter unhelpful or uninformed staff, you should escalate your complaint to a more senior official - Resolver can help you in this regard. This gives a more senior member of staff the opportunity to look into your complaint and address it to your satisfaction. Remember to keep a record of everyone you talk to or are referred to (including the remedial advice you are given and the name of the individual/s you spoke to) as well as the dates and times.

I received terrible service from my insurer

You don’t have to put up with impolite or rude staff members or bad service. You have a right to demand quality service from your insurer if you receive any service that is short of high quality, you can complain to a superior official of the insurer. Make sure you keep notes on dates, who you spoke to, their titles and what they recommended - Resolver helps you to do this.

I was misled by the customer care agent

It is often difficult but not impossible to prove that you have been misled by your insurer's staff members. Always make sure you are in contact with the right people, i.e. always call/contact the official customer care lines as indicated in any official communication from your insurer or on their website. You must also keep any SMSes, emails, call logs and advice that you send or receive when dealing with any specific issue.

If the ill advise resulted in a financial loss or compromised your insurance contract or claim in any way, you can go on to escalate the issue to the relevant ombud.

What is TCF?

As a financial services customer you have the right to be treated fairly. TCF stands for "Treating Customers Fairly" and the Financial Services Board (FSB) requires financial institutions to abide by certain principles to ensure that, you, the customer is always treated fairly. One of these outcomes is that you should not have difficulty making a claim or complaint.


Insurance complaints tool


Frequently Asked Questions

I bought an insurance policy but I don't want it any more, what can I do?

You are entitled to a cooling-off period of 30 days from the date that you received the summary or copy of the policy or the document informing you of your contract of insurance. Make sure you understand the cooling-off period very clearly when you buy a policy. You can ask your broker or insurer about it. Note that your cancellation must be in writing.

As long as you have not claimed against that policy, a benefit has not been paid under that policy or the insured event has not occurred, your insurance company will refund you any monies that you paid in full. If you have, it may deduct the cost of cover that you enjoyed or any market loss that it incurred. It may be useful to ask your broker or insurer about the implication of your claim on the refund prior to the cancellation. The insurance company must cancel the insurance policy and refund your money within 60 days from the date on which the insurance cover became effective.

Can I add products to my existing policy?

If you want to add on to your policy, you should contact your insurer and detail the additions you'd like made - give very specific details about the insurance products or benefits to be added on. The insurer should then advise you if you can or cannot make those additions. Often more than not, adding on to your existing policy will increase your premium. Most insurers will consolidate your old premium with the additional products premium and you will only pay one amount for the package. Note that you may be charged a fee for amending the policy so read the fine print carefully and ask your insure about any additional charges in that regard.

What should I do if I think I was mis-sold insurance?

If you believe you were sold insurance on the basis of misleading advice or distorted information by a broker or insurer, you should contact your insurer and raise a complaint. Remember to be specific - mention why you think you were mis-sold insurance, who mis-sold it to you or the method through which it was mis-sold to you and when and how much you have paid in premiums before you realised the policy was mis-sold to you.

Resolver will also help you keep a neat record of any communication between you and your insurer for future reference if the matter is not resolved. If the cooling-off period of the policy, generally 30 days after receiving a copy of the policy or the document informing you of your contract of insurance, isn't over yet, it may be a better option to cut your losses and cancel the policy.

My insurer makes it hard to submit a claim, is there anything I can do about this?

An ineffective claims process can be frustrating, especially when your well-being and life may depend on your insurer affording you speedy and effective service. If you felt that the claims process was unreasonably tedious or inefficient, you should raise a complaint with your insurer via Resolver. This will ensure that they are aware of the problem so, if appropriate, they can rectify the issue and prevent it from happening in the future.

An issue related to the efficiency of a claims process can only be escalated to the Short-term Insurance Ombud if the bad or poor quality service resulted in an actual financial claim/loss or involves the rejection of a claim. If your issue is related to the bad service you encountered that compromised your claim in any way, we will help you escalate your complaint to the ombud six weeks after you lodged your complaint with the insurer.

How do I know how much commission or fees I am being charged?

You are entitled to ask your broker or insurer for this information. Your broker or insurer should disclose to you the amount of commission, fees, charges or brokerage that you are being charged. Any information that your broker or insurer gives you must be factually correct, it must not be misleading or confusing and it should be given to you in plain language so that you can easily understand it.

What can I do if my complaint is not resolved by my insurer?

If your complaint relates to the insurance company, you can escalate your complaint to the Long-term Insurance Ombud or the Short-term Insurance Ombud. If it relates to financial advice you received you can escalate your complaint to the FAIS Ombud six weeks after you raised the issue as a complaint with the insurer and did not receive a response, or within six months if the resolution was not to your satisfaction.

Resolver will help ensure you have a fully packaged complaint to send to the ombudsman. The ombudsman will then look at your complaint and determine if you have been treated fairly. Any decision by the Ombudsman is binding on the company, but only binding on you if you accept the decision.

If you’re still unsatisfied with the outcome of your case, your last resort is to seek legal advice and take the matter to court.


Short-term insurance industry report 2017

The short-term insurance ombud recently released its report for the 2017 review period detailing the type of complaints it received and the company to company overturn rates. During this period, 9,962 complaints were resolved, with just over R87 million recovered for consumers.

Top complaints categories:

  • Motor vehicle claims: Car insurance complaints made up 49% of the total number of complaints received. “This figure mainly comprised claims rejected on the grounds that the insured was driving under the influence of alcohol.” (Business Tech 2018)
  • Homeowners claims: Contributed 20% overall. A staggering 61% of these were of claims made in relation to storm damage and other natural hazards. This was expected given the country-wide storms and flash floods experienced in 2017.
  • Commercial claims contributed 7,9% to the total; and
  • Household content claims contributed 6,2%.

How major insurers performed:


[All statistics and information interpreted and/or quoted as reported by Business Tech (2018) These are the most complained-about insurance companies in South Africa. Available from https://businesstech.co.za/news/finance/238857/these-are-the-most-complained-about-insurance-companies-in-south-africa/ [6 September 2018]]

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