How does your insurer shape up?

27 May 2015 - 10:51 By Wendy Knowler
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What do you consider when comparing motor and home insurers?

I’m guessing the monthly premium is the prime deciding factor for many, with the excess payable on claim probably being the next most scrutinised component.

But the real measure of an insurance company is how it deals with its clients in their hour of need - when they have an accident or a smash and grab; their cars are stolen or hijacked or their homes are burgled - and they make a claim on their policy.

Until recently, the only way to get a sense of how the competing insurers dealt with claims was via word-of-mouth testimonials or media reports, neither of which provide the big picture of each company’s claims’ handling approach.

But for the past three years, the Ombudsman for Short-Term Insurance (OSTI) - which mediates consumer complaints about declined insurance claims impartially and at no charge - has published annual statistics which reveal a lot about how the insurers treat their customers at claim time.

The most revealing statistic in the table relating to 2014’s claim statistics, below, is the number of complaints received by OSTI, out of a thousand claims received by an insurer, as well as the “overturn” rate.

The first number gives consumers an idea of how many of an insurer’s clients felt that their claims were unfairly declined or that the service they received at claim time was lacking.

As in previous years, on average, 0.03% of claims handled by insurers resulted in an OSTI complaint last year - that’s three out of 1000.

The overturn rate is the percentage of rejected claims or service issue complaints which the OSTI “overturned” in favour of the consumer.

In 2014, 31% were overturned by OSTI, or, as a result of its mediation, the insurer gave the policyholder some form of benefit they weren’t prepared to give them before.

In other words, less than a third of complaints are settled in the consumer’s favour.

So, here’s what to look for in the sea of numbers:

*An overturn rate of significantly higher than 31% indicates that the Ombud’s office found that the insurer’s decision had unfairly prejudiced the policyholder in an above-average percentage of cases, which is concerning, and the opposite applies;

*Look at the /1000 column. If the number is a lot more than the average of 3/1000, that means that a disproportionate number of that insurer’s claims ended up as a complaint to the OSTI, which is not a good sign, and the opposite applies.

Insurers with the highest percentage of complaints to OSTI (the average being 3/1000):

  • RMB Structured Insurance: 16/1000
  • New National: 14/1000
  • Ace Insurance: 13/1000
  • King Price: 13/1000
  • Saxum Insurance: 13/1000
  • AIG South Africa: 11/1000

Insurers with the highest overturn rate (the average being 31%):

Constantia Insurance: 44,58% (72 complaints received by OSTI) Dial Direct: 37,15% (265 complaints) JDG Micro Insurance: 66,67% (8 complaints) Monarch Insurance: 54,55% (12 complaints) New National: 46,95% (521 complaints) SAFIRE Insurance: 66,67% (7 complaints) Shoprite Insurance: 47,06% (19 complaints)

Best of the big Insurers:

Outsurance: 2/1000 claims led to an OSTI complaint, and of those 493 complaints, 13,83% were overturned

Santam: 2/1000 complaints led to an OSTI complaint, and of those 680 complaints,  29.26% were overturned

Hollard: 2/1000 complaints led to an OSTI complaint, and of those 632 complaints, 30,81% were overturned Alexander Forbes: 3/1000 complaints led to an OSTI complaint, and of those 179 complaints,  26,79% were overturned

 Read the Ombudsman For Short-Term Insurance (“OSTI”) report in pdf format

*To contact OSTI, call 0860 726 890 or go to www.osti.co.za

*Wendy Knowler sits on the OSTI board as a consumer representative.

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