More than R1bn. That’s the amount of money that the two insurance ombud offices — long-term and short-term — awarded to consumers whose complaints were heard by their adjudicators in the three years from 2020 to 2022.

“Such is the important role which these offices play in our society,” said Judge Ron McLaren, who retired as joint ombudsman at the end of last year, at the release of their joint 2022 annual report this week. The offices underwent a “soft amalgamation” in 2020 and are due to be fully integrated with the Ombudsman for Banking Services and the Credit Ombud as the Financial Services Ombuds Scheme by January next year.

Funeral policy complaints continued to make up the biggest category of long-term insurance complaints in 2022 — 48% of the total, up from 45% the previous year.

The percentage of cases resolved in favour of complainants dropped to 29% from just over 34% in 2021.

One of the funeral policy matters resulted in the Ombudsman for Long-Term Insurance (OLTI) making a final determination against Santam Structured Life — one of five such determinations made in 2022 after the insurers concerned refused to abide by a provisional ruling against them. If a final determination goes against an insurer, the details of the matter, including the name of the insurer, are published on the OLTI’s website.

“Mr K”, the uncle of the complainant, had been in and out of hospital when he asked the complainant to take out a funeral policy on his life. So she bought what she considered to be a funeral policy from Santam.

Her uncle died in January 2022 after which she lodged a claim with the insurer, which declined it on the basis that she’d bought not a funeral policy but an “accidental/natural death and hospital cash benefits product”.

Santam contended that Mr K had been added to the policy as an “additional dependant” but he was neither living with her, nor financially dependent on her, which, Santam argued, constituted a misrepresentation or material non-disclosure at policy application stage which entitled it to decline the claim and to cancel the policy from its inception.

“Other complaints received by our office concerning this product show that the complainant’s assumption that this was a funeral policy is not unique,” the final determination read.

“The product has the following features which lead to this assumption, including a low premium and sum insured; the fact that multiple lives can be covered and the waiting period before cover commences for natural causes — a restriction which is commonly used in funeral policies — plus the fact that it’s aimed at the lower income market and is sold by means of direct selling.

The OLTI argued that where there is an unusual term or condition in a policy, the insurer has a duty to draw attention to it.

Santam said the proviso that the dependents on the policy had to be “permanently residing and financially dependent on you” appeared in small print on the application form, but the Ombud’s adjudicators said it was too small to capture a consumer’s attention. “The adjudicators’ meeting was of the view that even if contractually the insurer was entitled to decline the claim, the benefit should be paid on the basis of equity/fairness.”

Santam then agreed to admit the claim and paid the benefit of R40,000.

In another final determination case, an insurer was found to have misled a consumer in a telesales call.

The policy, administered by a bank and underwritten by the Liberty Group , was taken out in September 2019, providing cover for death due to “non-natural” causes. The insured passed away eight months later.

Liberty declined the complainant’s claim on the grounds that the insured’s death was not due to “non-natural” causes.

But the OLTI adjudicators pointed out that when asked during the telesales call at the inception of the policy what cover he preferred, he had responded “life cover”.

But “when the call centre agent mentioned “non-natural”, it was in a rushed manner and often inaudible and the insured was never asked if he understood the terms of cover”.

The adjudicators questioned whether there had been a “meeting of the minds” when the policy was taken out, but Liberty insisted there had been. The call had passed its “quality assurance process”, the insurer said.

A subsequent adjudicators’ meeting, presided over by Judge McLaren, noted: “From the insured’s medical disclosures, it should have been apparent that he wanted cover for his condition and that he was not applying for accidental cover. Even after listening to the call numerous times, it was almost impossible to hear the reference to ‘non-natural’.”

In any event, the adjudicators said, the term “non-natural” was misleading.

The adjudicators decided that an amount of R30,000 should be paid to the complainant by the insurer as compensation for poor service, on top of a refund of the premiums paid.

But Liberty maintained its view that there had been a meeting of the minds at sales stage and argued that the insured was intellectually competent to understand, and had made “affirming gestures” in response to what the call centre agent conveyed to him during the telesales call, and he’d had ample opportunity to ask for clarification or explanation if required. It refused to refund the premiums, but poor service, on the part of the bank, was, however, acknowledged and a counter-offer of R15,000 compensation was made.

At the final determination, Liberty’s stance was said to have demonstrated “a lack of appreciation of the serious nature of the poor service that had been rendered”.

The insurer was instructed to refund all the premiums paid and to pay an amount of R30,000 in compensation. Liberty eventually paid the complainant a total amount of R31,320 as a result.

GET IN TOUCH: You can contact Wendy Knowler for advice with your consumer issues via email: consumer@knowler.co.za or on Twitter: @wendyknowler.