An Information Regulator investigation into a complaint against the Ombudsman for Short-term Insurance’s failure to release information to a complainant has raised questions about the independence of the scheme that is supposed to be an impartial arbiter for consumers.
Forensic expert Stan Bezuidenhout, who assists clients facing insurance repudiations, said he had sought data from the ombud scheme, but his request was met with “hostility and accusations”.
He wanted additional data because in his work, “as more of my clients have engaged with the Ombudsman, a worrying sentiment has emerged. Increasingly, they express dissatisfaction with the Ombudsman’s efforts, feeling that the office may be more aligned with the interests of insurers than with those of consumers.”
He said clients had described interactions where they felt the Ombudsman acted as a guardian for the insurance industry.
Areas where there might be a bias towards insurers included, for instance, the use of “experts” by the insurers; the use of legal argument by insurers to counter disputes and ability of complainants to pay for lawyers; and the requirement by the Ombudsman in some disputes, for the consumer to provide “expert” evidence, the procuring of which may cost a great deal of money for a consumer with a crashed vehicle.
Another potential area of bias included requirements that complainants to the Ombudsman provide “expert” evidence within seven days, a similar requirement not meted out to the insurers.
Bezuidenhout said the Ombudsman also had a range of reasons why it did not take on cases, such as when the cases were “too complex,” or disagreement of facts between the parties or their “experts”, or they could refer the case to court, or they simply “do not like your attitude”.
In all of these cases, the dispute invariably ends up with the insurer not paying out, Bezuidenhout said in an interview.
He said the Information Regulator’s investigation found the ombud scheme unjustifiably resisted transparency, failed to provide the requested data, and ruled that the records should be released.
Bezuidenhout said these findings potentially raised serious concerns about the ombud scheme’s accountability and could undermine public trust, highlighting the need for reforms.
He said the report criticised the Ombudsman’s office for not being forthcoming with information that could reveal patterns or trends in its decision-making processes, which were crucial for maintaining public trust.
The Ombudsman, in response to questions on these matters from Business Report, said: “This is a matter between the complainant, Mr Stan Bezuidenhout, and the Non-life Insurance Division (previously Ombudsman for Short-Term Insurance) of the National Financial Ombud Scheme (NFO), and the NFO is in the process of considering the Information Regulator’s decision.”
The Ombudsman for Short-term Insurance wrote in its latest annual report that it had received 16 086 complaints in 2023, and 26% of the cases that were resolved were either partially or wholly found to be in favour of the complainant.
There were 3 137 full cases finalised during the year. Of the complaints received, 12 188 became registered as formal complaints.
Ombudsman Judge Margie Victor said in the report that claims during the year had emanated from catastrophic events and vicissitudes from the past few years, such as the aftermath of the Covid-19 crisis and all the health, disability and death claims, business interruption claims, the damage caused by floods, electricity outages and the resultant power surges and damage to small business.
“In these past 12 months, I have become acutely aware of the need for more consumer education, especially when dealing with consumers who are concluding contracts in English which may be their third or fourth language and dealing with contractual legalese and who may also lack contractual sophistication. I suppose a viable solution and one which carries little expense for an insurer is to have pre-recorded input on the terms and conditions in the prospective consumer’s mother tongue. This can so easily be done with telesales and when a consumer comes into the insurer’s office; all this before concluding the contract.”
BUSINESS REPORT