Vehicle-related claim disputes remain high, with office awarding millions to consumers.

Loadshedding schedules imply that power surges are no longer considered “an unexpected and unforeseen event,” which may result in electronics and appliances not being covered.

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The Ombudsman for Short-Term Insurance (Osti) has recorded a steady rise in complaints related to power surges and has advised policyholders to re-evaluate their cover as insurers tighten their belts in the face of rolling blackouts. 

This is according to data highlighted in a joint 2022 annual report published by Osti and Olti (Ombudsman for Long-Term Insurance) titled Shaping our Tomorrow, released on Tuesday. Retired judge Margie Victor is Ombud of both entities. 

Osti recorded 11 542 complaints across all categories in 2022, 17.8% more than in 2021, 10 411 of which it says were finalized by the end of the period.  Claims falling under the household contents category accounted for 5.9% of the total complaints reported. 

Of household content disputes recorded, 20% were related to power surges – in 2018 these only accounted for 3% in the category. However, these types of disputes have climbed due to the increasing frequency of blackouts. 

The leading cause of complaints in this category was the rejection of claims based on an exclusion in the policy, with a total of 166 (41%) rejected on this ground. 

Osti says in the report it is time for consumers to educate themselves on what their respective insurers are willing to cover as the availability of load shedding schedules potentially nullifies some “unexpected and unforeseen event” claims.

“Most insurers have changed the cover afforded in relation to power surge[s] and how they will view the risk of [a] power surge. As load shedding is scheduled, it may no longer be an unexpected and unforeseen event,” states the report. 

“If cover is provided, it may be that some policies will offer the cover as a separate benefit for which a separate premium must be paid,” it notes, adding that the policy document will indicate whether a claim related to a power surge will be covered. 

Theft and burglary (40%), accidental damage (16.6%) and acts of nature (8.7%) were among the other complaints registered under the home contents claim dispute category. 

Vehicle complaints dominate 

Most consumers who lodged disputes did so in relation to vehicle-related insurance claims, which accounted for 43% of total complaints. 

Within this category, accident-related disputes led with 65.1% of complaints, followed by those related to warranty and mechanical breakdown (13.8%) and theft and hijacking (6.7%). 

Most motorist complaints centered on insurers’ rejection of claims on the grounds of a policy exclusion. 

Motor vehicle disputes also emanated from the quantum of the claim in dispute (711), non disclosure/misrepresentation at inception (243), driving under the influence of alcohol/and or drugs (153) as well as mechanical and electrical breakdowns (112). 

Another telling cause for tension between the insured and insurer regarding vehicle claims was the non-payment of premiums, with 194 such disputes registered. 

Like many other spending categories, the short-term insurance industry is showing evidence of a consumer under pressure. 

Faster completions 

For the period under review, R109 million in “monetary benefit and value” was awarded to consumers largely in the categories of commercial (R43.8 million), motor-vehicle (R39.6 million) and homeowner-related complaints (R16.68 million). 

Osti took 16 days less on average to resolve disputes compared to the previous year, with the average dispute taking 122 days to finalise – two days short of the office’s target. 

“Several initiatives were implemented during the year to improve the average TAT [turnaround time], which resulted in a reduction of 16 days in the TAT from 2021 despite the almost 18% increase in the volume of new complaints and no increase to the staff complement,” it reports. 

Excluding weekends and public holidays, the average turnaround time for the year was, it says, around 85 days. 

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Source: Moneyweb – Link