Every year, the Ombudsman for Short-Term Insurance publishes its annual report on the most complained about insurance companies in South Africa. 

According to the recently released 2018 report, the Ombudsman resolved 9474 out of the 9779 formal complaints that were lodged, and 65% of cases were finalised within four months.

A total of R87.2 million was recovered for consumers.

In 2017, by contrast, 9962 complaints were resolved to the tune of R87.1 million, with an average turn-around time of 131 days. 

Let’s take a closer look at some of the other findings, and which insurance companies were hit hardest.  

Motor vehicle insurance, again, accounts for the highest amount (almost half, 48%) of all finalised complaints. This isn’t too surprising, and is usually the case every year, as motor vehicle insurance continues to be one of the most misunderstood and high-risk insurance sectors of all.

The majority of these complaints (around 74%) were related to accidental damage, and this was also the case in 2017. Warranty and mechanical breakdown claims accounted for 9%, while theft and hijack claims saw a decrease from 9% in 2017 to 8%.

What exactly caused these disputes between the insurer and the insured? According to Ayanda Mazwi, senior assistant Ombudsman:

“The primary cause for complaints was the amount offered for the settlement of claims. The disputes varied from the calculation of vehicle and/or salvage values, uninsured credit short-falls and accessories, excesses and the use of alternate or second hand part prices in calculating the repair amount, to name a few.”

Homeowner’s insurance was the second most complained about, accounting for 21% of all complaints, and were largely related (around 61%) to claims for damage caused by acts of nature. These were predominantly storm-related.

Complaints related to household content insurance are down from 6% in 2017 to 5% in 2018, but complaints related to commercial insurance increased from 8% to 9%.

Theft and burglary claims, likewise, also increased from 4% to 6%.

The Ombudsman’s report highlights the insurance companies that received the most complaints, but stressed that there were some important notes to be aware of when having a look at the findings. 

One of these caveats is that, of course, larger insurance companies will issue more policies, and will inevitably draw a proportionally larger chunk of complaints. This is only natural. 

This is how some of the major insurers performed:

• Absa Insurance – 799 complaints;

• MiWay Insurance – 484 complaints;

• Old Mutual Insure – 636 complaints;

• Hollard Insurance – 535 complaints

• Santam – 548 complaints;

• Standard Insurance – 549 complaints;

• Guardrisk Insurance – 526 complaints;

• OUTsurance – 345 complaints.

According to the Ombudsman, however, no adverse conclusions should be drawn against any insurance company, based purely on the number of complaints received against them. 

Because so many people don’t fully understand how insurance works, or haven’t asked their brokers to explain the parts they don’t understand, we have to look at the data in different ways.

“For example, when considering the percentage of complaints received by this office against a large insurer, the large insurer, upon a superficial analysis, therefore appears to attract a relatively low number of complaints.”

The Ombudsman states that the more important statistic to focus on is the proportion of personal lines complaints, relative to an insurer’s share of the total personal lines claims reported to the FSCA. 

The clearest indicator of this can be found in column 5 in the tables below, which show the number of complaints to the Ombudsman office, per thousand claims received by the insurer.

See, according to the report, when an insurance company receives a high number of complaints to the Ombudsman against it, per thousand claims, it’s a strong indicator that the claims have been dealt with unfairly by the insurer. 

When this is considered in conjunction with the overturn rate (when the insurer’s original decision is changed to favour the insured, due to the complaint lodged with the Ombudsman), then we could also say that a high overturn rate may be an indicator that the insurer could be treating clients unfairly.

Of course, this isn’t always the case, as a high overturn rate could also be indicative of a high degree of cooperation between the insurance company and the Ombudsman, because the insurer may genuinely care about the client, and wants to keep them satisfied.  

So, measuring by the highest number of complaints received per thousand claims, which are the top ten most complained about insurers in South Africa?

Lion Of Africa took the top spot, with a staggering amount of complaints, followed by Lloyd’s and New National. Absa (also the most complained about bank in South Africa) and Oakhurst rounded up the top five. 

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