From the newsroom
Publications
Download the Brochure
Alternatively you can also email us at [email protected] and we'll gladly post you a copy.
Please note: This brochure is available in English and Zulu
Alternatively you can also email us at [email protected] and we'll gladly post you a copy.
Please note: This brochure is available in English and Zulu
In an effort aimed at promoting consumer empowerment and financial literacy, some of the financial ombud schemes in South Africa, namely the Ombudsman for Banking Services (OBS), the Credit Ombud (CO), the Financial Advisory and Intermediary Services (FAIS) Ombud, the Ombudsman for Long-term Insurance (OLTI) and the Ombudsman for Short-term Insurance (OSTI), are joining forces for the MSWSA 2023. The collaborative effort is designed to showcase the seamless cooperation between these offices in addressing consumer complaints and disputes, ultimately ensuring a more secure and informed financial landscape for all.
Under the theme "Plan Your Money, Plant Your Future", this year's MSWSA campaign focuses on raising awareness about the importance of planning one’s finances for a financially sound future. These ombud offices are set to highlight how they intervene to assist consumers in resolving disputes with financial institutions, safeguarding their financial interests, and promoting informed decision-making.
During the 2022/2023 financial year, the cumulative efforts of these ombuds offices have led to the resolution of cases resulting in more than R400 million in the pockets of consumers. This achievement underscores the commitment and dedication of the financial ombud community to ensuring fair outcomes.
The highlight of the MSWSA 2023 collaboration will be a webinar set for 30 August 2023. During this interactive session, representatives from each office will present an overview of the type of disputes they receive and how they go about resolving them. They will also explain how the various industries they serve fit into the MSWSA 2023 theme of planning money matters for a better financial future.
For more information visit www.mswsa.co.za or email [email protected].
Join us in making South Africa Money Smart!
Facebook: Money Smart Week South Africa Twitter: @MSW_SA
Instagram: @money_smart_week_sa YouTube: Money Smart Week South Africa
Email: [email protected]
Consumers need to familiarize themselves with the terms and conditions of their policies because it allows them to know what is covered and what to do when submitting a claim. It also enables them to confirm if the cover provided meets their requirements.
Assistant Ombudsman from the Ombudsman for Short-Term Insurance, Relebogile Mashego, advises consumers to provide as much detail as possible when submitting a claim, such as the loss, its value, and the proof of ownership. Examples of documents that may be required or useful include quotations, damage reports, photos, videos, details of witnesses, statements, etc.”
The following listicle by the Ombudsman for Short-Term Insurance (OSTI) can be helpful.
It is not good practice for consumers to only review their policies after a loss or during a claim. Remember, insurance is meant to protect consumers against insured risks. Therefore, it requires a proactive approach, and it would help if consumers were familiar with their policies and observed their obligations.
MEDIA RELEASE
___________
INSURANCE OMBUDS ARE FUTURE FIT TO TACKLE POST-COVID ERA
23 May 2023
With the lifting of the dark clouds of the Covid-19 pandemic, the Ombudsman for Long-term Insurance (OLTI) and the Ombudsman for Short-term Insurance (OSTI) are looking ahead and planning with optimism.
In a joint Annual Report, which has as its theme “Shaping our Tomorrow”, the two insurance dispute resolution schemes said a highlight of the 2022 financial year has been the granting of recognition as industry ombud schemes by the Ombud Council in terms of section 194 of the Financial Sector Regulation Act, 2017.
The Ombud Council has a mandate to oversee financial ombud schemes and assist in ensuring that they provide customers with access to affordable, effective, independent and fair alternative dispute resolution processes for financial complaints.
Much progress was also made during the year towards the amalgamation
of the four industry ombud schemes, being OLTI, OSTI, the Ombudsman for Banking Services and the Credit Ombud.
Denise Gabriels, Deputy Ombudsman for OLTI, said meetings between members of the four ombudsman schemes have had the benefit of fostering working relationships amongst the offices and a better understanding of one another’s operations and challenges.
OLTI reported it had received 7 126 chargeable complaints (8 163 in 2021) while OSTI ended the year with 11 542 registered complaints (9 797 in 2021).
OLTI and OSTI jointly placed more than R330 million (R331 134 101) in the hands of complainants. OLTI recovered R220 836 922 for complainants in lump sums and an additional R857 544 was awarded as compensation. OSTI recorded payment of R109 439 635 as the monetary benefit and value for consumers who approached the office for assistance.
Tribute was paid to Judge Ron McLaren who retired at the end of 2022 as joint Ombudsman for OLTI and OSTI.
Gabriels said Judge McLaren not only had an open-door policy, but he lived it.
“He was always available to give guidance when one was stuck with a particularly difficult matter. He left no stone unturned in his investigation of a matter and treated every person’s view with respect.”
She welcomed Judge McLaren’s replacement, Judge Margie Victor, saying: “We look forward to the fresh insights and guidance she will bring, especially as we transition to an amalgamated financial ombud scheme.”
Edite Teixeira-Mckinon, CEO of OSTI, said Judge McLaren will be remembered especially for his integrity and fairness, and his respect for the dignity of all persons.
“His quiet strength and confidence made all who worked with him feel strong and confident,” she said.
After more than 20 years, OLTI has moved to new premises “just around the corner” at Claremont Central Building, Vineyard Road, Claremont.
Four new members subscribed to the OLTI scheme in 2022, viz. Long Life Insurance Limited, Guardrisk Microinsurance Limited, NMS Insurance Services
(SA) Limited and Old Mutual Alternative Risk Transfer Limited.
Teixeira-Mckinon said of the 11 542 complaints registered by OSTI during the 2022 financial year, 39 were COVID-19-related complaints, 57 were SASRIA-related complaints arising from the civil unrest in July 2021, 202 related to power surge complaints, and 647 related to the KwaZulu-Natal floods of April and May 2022.
She said, despite experiencing a substantial increase in complaints, the increased workload was managed by the same staff complement and the average number of days taken to resolve complaints decreased by 16 days from 138 days in 2021 to 122 days.
Tribute must go to all the staff who worked tirelessly to end the year on a healthy operational performance, said Teixeira-Mckinon.
For the first time, OSTI embarked on the INSETA workplace-based learning programme for unemployed youth and had two learners in this programme. The programme aims to give learners work experience, thereby increasing their chances of gaining permanent employment and contributing to the economy.
The OSTI achieved an average customer experience rating of 78 out of a target of 80 (97,5%) for 2022. Customer experience surveys are sent to both insurers and complainants on the finalisation of a complaint.
As a result of OSTI’s engagements with the South African Insurance Association, Financial Sector Conduct Authority, and the non-life industry, four new members joined the scheme, viz. Escap SOC Limited, Guardrisk Microinsurance Limited, Aurora Insurance Company Limited and Clientele General Insurance Limited.
ABOUT THE OFFICES
The Ombudsman for Long-term Insurance will continue to have jurisdiction over complaints about long-term (life) insurance products such as life insurance, funeral, long-term disability, credit life and health insurance policies.
The Ombudsman for Short-term Insurance will continue to have jurisdiction over all types of short-term (non-life) insurance products, including motor, house owners’ (buildings), householders (contents), cell phone, travel, disability and credit protection insurance etc., and over commercial insurance for small businesses and sole proprietors.
The offices of both the Ombudsman for Long-term Insurance and the Ombudsman for Short-term Insurance will continue to provide the insuring public with a free, efficient and fair dispute resolution mechanism through an alternative dispute resolution process, applying the law and principles of fairness and equity.
For complainants who are uncertain at which office to lodge a complaint, there is a single portal which provides the following contact points:
Website: www.insuranceombudsman.co.za
Telefax: 086 589 0696
Email: [email protected]
Share call number: 0860 103 236
Complainants of both life and non-life insurance can also continue to use the existing entry points. If a complaint needs to be transferred to the other office, it will be a seamless process.
For the Ombudsman for Short-term Insurance, visit website www.osti.co.za or call 0860 726 890 or email [email protected].
For the Ombudsman for Long-term Insurance, visit website www.ombud.co.za or call 0860 103 236 or email [email protected].
Issued by:
Yogin Devan
Meropa Communications
(031) 201 0550 / 083 326 3962
On behalf of the:
Ombudsman for Long-term Insurance
Ombudsman for Short-term Insurance
As the easter holiday season approaches, many families will be planning their long-distance trips to visit relatives or to go on holiday. These trips are often opportunities for friends and families to bond and build memories, so preparing for unforeseen events becomes paramount. The Ombudsman for Short-Term Insurance (OSTI) advises drivers to review their car insurance.
With South Africa undergoing “greylisting” and experiencing a period of low economic growth coupled with rising inflation, it would be understandable for consumers to cut costs where possible. Consumers start with insurance and vehicle maintenance when they want to cut costs. Most people view insurance as a grudge purchase, a cost they wouldn’t pay in their ideal world. The Department of Transport reported 134 fatal car crashes for the 2022 Easter festive season, underscoring dangers on the road during holidays. This highlights the need for insurance when making any long-distance trips.
An insured car gives a driver peace of mind knowing that their policy protects their family against potential monetary losses. With insurance to cover the costs, it might be easier to pay for repairs to your vehicle. In addition, car insurance can protect you against third-party liability claims if you cause damage to someone's property.
Insurance plays a vital role in our financial well-being. So as you prepare for your holiday and the year ahead, check your policies to ensure you have the correct cover in place, update your details and inform your insurer of any changes in your circumstances that may have occurred since the policy started.
Before embarking on any trips this Easter season, here are some tips to help you get sorted for the long drive:
If there is a dispute with your insurer, we advise you to complain to your insurance company first. Ensure you keep copies of all correspondence between you and your insurer. If you are unhappy with your insurer’s approach, you can complete our complaint form and return it to us by post, fax, email or online.
Over the years, the Ombudsman for Short-term Insurance (OSTI) has been indicating that since “loadshedding” was first introduced into the South African lexicon, it has seen an expected steady rise in complaints relating to power surge claims. With the higher incidence of loadshedding, known in other parts of the world simply as power outages, there are greater risks faced by SA consumers, including damage to electrical appliances and electronic devices, theft and related incidents, spoilt food, and now recently, more frequent theft of electrical cables from the national grid.
The theft of electrical cables is a particularly heinous crime since it has; more significant implications for the SA public, a damaging effect on the economy and their livelihoods, and also threatens people's lives in some instances. Patients on life support systems and those whose medication requires refrigeration face fatal consequences. Traffic flow is impacted, resulting in motor accidents and ordinary business operations.
The agricultural and logistics sectors have now also expressed concerns and highlighted risks relating to food security.
Apart from challenges emanating from loadshedding and related developments, on 24 February 2023, South Africa was “greylisted” by the Financial Action Task Force (FATF), a global anti-money laundering watchdog. This “greylisting”, low economic growth, rising inflation and the recent hikes in interest rates also mean that the average South African remains under immense pressure. It seems hard times are seemingly ahead indeed.
On the other hand, changing weather patterns, and a volatile socio-political climate with resultant uprisings and upheavals as evidenced by the KZN, Eastern Cape and Gauteng natural disasters in 2022 and more frequent looting incidents (especially in 2021), have led to reinsurers reviewing their appetite for SA risk. This affects South African insurers, their exposure to the related risks, and their willingness or capacity to underwrite some of them.
All these developments mean that the industry is facing heavy headwinds. This may also mean that the South African public is increasingly being exposed to higher levels of risk that may no longer be insurable. It is, therefore, important that all parties work together to counter the risks and avoid avoidable ones. The cost of insurance, in general, is likely to increase as these risks permeate all aspects of our life.
It would, however, be unwise to unnecessarily downgrade one’s insurance coverage as a way to survive the many financial pressures. The proactive thing to do may be to speak to one’s broker or insurer to ensure that adjustments are made and exposure to risk is minimal. Premiums must still be paid on time, and perhaps only the frills must be tampered with, essential coverage remaining in place.
Regarding the loadshedding related challenges, it is best to ensure that consumers buy power surge cover where this is offered, install surge protection devices, buy uninterrupted power supply units, ensure that batteries for security systems, gate and garage motors, and solar systems are charged whenever loadshedding strikes, to reduce security breaches, protect electronic devices and electrical appliances, and to find other survival methods.
The OSTI provides the insuring public and the short-term (non-life) insurance industry with a free, efficient, and fair dispute resolution mechanism through an alternative dispute resolution process, applying the law and principles of fairness and equity.
RETIRED JUDGE MARGIE VICTOR IS THE NEW INSURANCE OMBUDSMAN
Retired Johannesburg High Court Judge Margie Victor, the first woman to be elected to the Johannesburg Bar Council in 1996, has been appointed as Ombudsman for Long-term Insurance and Ombudsman for Short-term Insurance for two years, commencing 1 January 2023. Judge Victor, who replaces Judge Ron McLaren, will be the Ombudsman of the life (long-term) and non-life (short-term) insurance industries.
Possessed of a “progressive” approach and strongly favouring social reform, Judge Victor qualified as a social worker and then as an attorney. She was called to the bar to practice as an advocate. In 2008, after spending 25 years as an advocate at the Johannesburg Bar, she was elevated to the Johannesburg High Court of South Africa (Gauteng Local Division) as a judge. She was a judge of the Competition Appeal Court since 2015. In 2016 she served as Acting Justice of the Supreme Court of Appeal. In 2019 she was appointed as Acting Justice of the Constitutional Court until 2021.
Judge Victor’s community work has included establishing a Montessori pre-primary school for underprivileged children. During her career as an advocate, she assisted many abused women with legal advice. In the late 1980’s and early 1990’s, she did extensive treason trial work, defending young members of communities accused of public violence and related issues. She also undertook a massive environmental law case assisting a small community living in the shadows of an industrial mill. When she was elected to the Johannesburg Bar Council, she led the call for gender and racial transformation in the leadership structures. She has written a seminal constitutional case enabling domestic workers to obtain compensation for workplace injuries or death.
Her contribution outside of judicial work includes being vice-president of the South African Chapter of the International Association of Women Judges. She was also involved in the WOZA Women’s Academy of Learning Project - “Women Judges making a difference”. She has over the years mentored many legal practitioners to strengthen their skills.
Judge Victor said she was excited to fulfil her new role as Ombudsman, helping to resolve insurance disputes in an impartial, fair and timely manner. “The Offices of both the Ombudsman for Short-term Insurance and the Ombudsman for Long-term Insurance are accessible to all. We enhance consumer confidence and will strive to improve insurance services by sharing our insights. But above all, everything we do will be guided by our sense of fairness.” Denise Gabriels, Deputy Ombudsman for Long-term Insurance, said Judge Victor’s achievements during her judicial career will serve her well to fill the large shoes left by Judge McLaren.
Edite Teixeira-Mckinon, CEO of the Office for Short-term Insurance, said: “Given her commendable track record in the judiciary, it is evident Judge Victor will be a consummate Insurance Ombudsman who will strive to offer an efficient and quick turn-around on complaints.”
Water Damage Claims:
October 2022, Johannesburg – As South Africa heads into spring, it is important we prepare for the inevitable rain and possible damage that come with the season. According to the South African Weather Services, we can expect 3 to 8 days of rain during the month of October. While this might seem like an average rain forecast, it is imperative we remember that a single day of rain can bring torrential floods that cause great water damage.
To prepare for this rainy season, everyone must be familiar with what constitutes claimable water damage with insurers and what does not. The water damage must be sudden and unforeseen - not gradual or over time or involve wear-and-tear. There must be actual damage, which means one cannot claim for carpets or clothing that have become wet, unless the wetness resulted in damage, including change in appearance or unsightly marks or a bad odour, for example. One can also not claim for mould because it occurs over time. Furthermore, the cause of the damage cannot be inherent vice, defective design or workmanship, or lack of maintenance.
It is important to note that carrying out repairs before the damage has been validated may lead to declined claims. Should it be necessary to conduct urgent or emergency repairs, proper records or proof must be maintained for validation purposes. If the loss or damage cannot be validated, the claim may be declined.
Case Study: Water Damage
In a case OSTI dealt with recently, Mrs. M submitted a claim to the insurer for storm related damage to the insured property. The insurer was not convinced that the claim fell within the ambit of cover, thus the claim was rejected. Dissatisfied with the outcome and believing that the insurer was reneging on its obligation, Mrs. M approached OSTI to compel the insurer to settle the claim.
In her application for assistance, Mrs. M indicated that her property was damaged due to a storm and heavy rains. The roof was leaking.
The insurer rejected the claim on the basis that the proximate cause of the damage was a lack of maintenance.
The relevant policy exclusion the insurer relied on is as follows:
“General Exclusions
This section is applicable to the entire policy.
You will not be covered for loss or damage caused by:
Servicing, maintenance, cleaning, repairing, restoring, dyeing, bleaching or alteration”
To substantiate its stance, the insurer referred to the damage report prepared by its appointed assessor. The assessor had found no evidence of storm damage but that the asbestos roof coverings were not maintained, allowing water to penetrate through the unpainted roof sheeting. The assessor expressed the opinion that the roof would not have leaked had it been maintained. The assessor recommended the replacement of the roof sheeting to remedy the situation.
Whilst Mrs. M did not dispute that the roof was not maintained, she argued that they moved into the property 8 months before the claim was submitted, hence she should not be held responsible for the unmaintained condition of the roof. It was Mrs. M’s further contention that the insurer should have assessed the property and noted any defects before proceeding to collect premiums.
OSTI could not grant the relief sought by Mrs. M. The insurer’s decision to reject the claim was upheld as it was made in line with the policy terms and conditions. Mrs. M conceded that the property was not maintained. Her own version also suggested that the loss was not covered by the policy as she attributed her loss to heavy rains (in the plural, meaning multiple events). The insurer further demonstrated, relying on the assessor’s report, that the unmaintained roof was material to the loss. Consequently, OSTI could not fault the insurer’s stance. Mrs. M’s contentions that the insurer had not conducted any inspections is irrelevant as the policy clearly states that no cover will be provided where there is lack of maintenance.
OSTI pointed out to Mrs. M that the terms of the policy governing the contractual relationship between the insurer and Mrs. M do not require the insurer to assess the property before placing it on cover. It is the insured’s responsibility to ensure that the property is regularly maintained.
Mrs. M’s case illustrates that the mere fact that a policyholder pays a premium does not necessarily mean that all claims submitted will be accepted. An insurer is entitled to refute a claim where it can demonstrate, on a balance of probabilities, that the damage is attributable to the unmaintained condition of the property.
Depending on the type of policy, in the event of a claim, an insurer may appoint an expert to establish whether the policyholder discharged the responsibility of attending to the necessary maintenance, and if not, whether the cause of the damage can be attributed to such a failure.
Even if an insured event, such as a storm or rain, did occur and caused water damage to the insured property, in certain instances, similar to Mrs. M’s case, an insurer may justly repudiate such a claim. Should an insurer rely on a lack of maintenance to reject a claim, the insurer’s evidence will have to show on a balance of probabilities that the proximate cause of the damage is the lack of maintenance of the property. Such evidence can be in the form of a damage report and photographs.
Certain policies include guidelines as to how a policyholder can make certain that the insured property is maintained. A policyholder need not physically assess the property in person before purchase or attend to the maintenance, there are service providers that can do this on behalf of the policyholders.
Where maintenance has been carried out, it is advisable to request invoices from the service provider, containing a detailed description of the work done. Similarly, when purchasing property one may request for an assessment to be carried out before purchase to ensure that the property does not have defects, and that where defects have been noted, they are rectified.
Tips for consumers during the rainy season:
Please send your application with a detailed curriculum vitae to Lorna O’Brien at O’Brien Recruitment, [email protected] by Friday, 14 October 2022.
THE OMBUDSMAN FOR SHORT-TERM INSURANCE WARNS CONSUMERS ON FUEL SAVING DEVICES
In today’s world of steeply rising fuel prices, it is easy to understand why consumers want to take every advantage available to minimise the pain at the fuel pumps. The temptation is therefore great to turn to so-called fuel-saving devices, be they in the form of gadgets fitted to fuel lines or fluids or tablets added to fuel to save some money.
Such fuel-saving devices however need to be approached with caution, if not avoided altogether. The first question consumers must ask themselves is, do these devices really save fuel as promised, and, secondly and more importantly, if so, why do the vehicle manufacturers not fit these devices or recommend the use of such devices? With the pressure on vehicle manufacturers to produce the most fuel-efficient vehicles in the market, it is a big red flag that these devices are not fitted by manufacturers, or that they do not recommend adding tablets and fluids to fuel.
Consumers not only run the risk of wasting hard-earned money on such devices that provide no fuel savings but run the greater risk of the possibility that the use of fluids, tablets or gadgets not recommended by manufacturers may actually harm their vehicles’ fuel system components.
Modern vehicles have complex systems that regulate fuel intake and exhaust gas recirculation, and these systems are very sensitive to any additives introduced to the fuel system, other than the lubricants or fuels recommended by the manufacturers. Manufacturers follow very strict guidelines when engineering their vehicles, and work closely with the manufacturers of lubricants and fuels, who create products to provide the best lubrication and fuel efficiency for specific vehicles. By adding untested tablets and fluids to a vehicle, may inhibit the ability of the recommended fuels and lubricants to function properly.
This may end up being a costly exercise in futility for consumers. Not only will they not have saved any money on their fuel costs, but they may also have to foot the bill for repairs to their vehicles which may run into thousands of rands.
It is also important to note that most, if not all, motor vehicle insurance policies that offer comprehensive cover exclude liability for mechanical malfunction or failure. Further, even if the consumer has a mechanical warranty policy in place that covers mechanical breakdowns, such policies also exclude damage caused by a consumer not following the manufacturer’s recommendations.
Ultimately, the onus rests on consumers to follow manufacturers’ recommendations. The best and most proven way to save fuel is still to exercise good driving habits and there is a host of resources available to consumers on these. The bottom line is that the old saying in this instance still holds true today – if you are pennywise, you may end up being pound foolish.
Tips for the youth to consider when taking out a short-term/non-life insurance policy
In today’s world, young people own some of the most expensive products on the market such as cell phones, cameras, and motor vehicles. In recognition of Youth Month, the Ombudsman for Short-Term Insurance (OSTI) has put together a few insurance tips.
Young people sometimes underestimate the importance of having insurance. The assumption is that nothing will go wrong. The importance of insurance is often only realised when a loss or damage is suffered.
Considering the unpredictability of life events, having the right insurance cover is a significant investment. Short-term/non-life insurance will provide you with financial security against unforeseen damage to or loss of your valuables.
The insurer will ask you a number of questions during the underwriting/sale of the policy. This is done to assess and price your risk. You must answer these questions truthfully. If you fail to do so, the insurer may not only reject a claim but also cancel the policy with effect from the start date. If an insurer cancels your policy, you may find it difficult to obtain other insurance cover.
OSTI sees far too many complaints where young policyholders who have taken out motor vehicle insurance misrepresented the ‘regular driver’. The regular driver is the person who will drive a motor vehicle most often during the period of cover. Drivers between the ages of 18 and 25 sometimes tell an insurer that their parents will be the regular driver so that they can be quoted a cheaper premium.
Insurers conduct detailed investigations when validating a claim. At this stage, such a misrepresentation will invariably be revealed, and the claim may be rejected on the basis of a material misrepresentation.
Before buying insurance, carefully consider your needs, what the insurance product covers, and how much it will cost you.
Choosing the best cover does not necessarily mean finding a policy with the cheapest premium. A cheaper premium may mean fewer benefits and higher excesses. Get insurance that is tailor-made to meet your needs and budget. You must also consistently manage your income and expenses to ensure that the premium is paid on time to prevent the policy from lapsing. This is particularly important as you are still building your insurance risk profile.
Remember that your insurance needs will change as your life and career develop. You should therefore review your insurance policies regularly.
You will not have cover if you reverse an insurance premium after it was successfully collected from your bank account by the insurer. Reversing a premium can even result in the immediate cancellation of the policy. Contact your insurer to see if any arrangements can be made when experiencing financial difficulties.
The insurer does not have an open-ended liability to compensate you for any loss or damage suffered. It is only liable if the claim falls within the scope of the cover provided in the policy documents. Read and understand the policy terms and conditions.
Be mindful of circumstances that may result in an insurer refusing to pay out on a claim, for example driving whilst under the influence of alcohol or without a valid driver’s licence, not adhering to the time periods in the policy, not meeting vehicle or home security requirements, and dishonesty.
Ask your insurer or broker to explain the exclusions of the cover and any obligations you may have under the policy. This will save you the stress and frustration of becoming aware of these only after you have suffered a loss.
For more insurance tips, follow the OSTI social media pages.
Facebook: The Insurance Ombudsman
Twitter: Insurance Ombudsman South Africa
LinkedIn Insurance Ombudsman
ENDS
About the Ombudsman for Short-Term Insurance
The Office of the Ombudsman for Short-Term Insurance (OSTI) is an independent, non-profit industry ombud scheme. Short-term/non-life insurance includes motor, house owners’ (buildings), householders (contents), cell phone, travel, disability and credit protection insurance, and commercial insurance for small businesses and sole proprietors. OSTI’s mandate is to provide the insuring public and the short-term/non-life insurance industry with a free, efficient, and fair dispute resolution mechanism through an alternative dispute resolution process, applying the law and principles of fairness and equity. OSTI is not a court of law. It examines the information and evidence placed before it by the parties to a dispute and makes recommendations that are guided by the legal position and principles of fairness and equity. In rare instances where required, OSTI may make rulings. It does not, nor is it empowered to, procure evidence or witnesses, or investigate a complaint. OSTI, it must be stressed, operates independently of both the Financial Sector Conduct Authority and the Prudential Authority in its adjudication and dispute resolution process.
OSTI urges the public to be entirely truthful with insurance companies
JOHANNESBURG – The Ombudsman for Short-Term Insurance (OSTI) would like to remind consumers not to withhold or misrepresent information when taking out short-term/non-life insurance or when they claim from insurance companies. OSTI points out that non-disclosure or misrepresentation of material facts can lead to a claim being declined or a policy being cancelled or both. A consumer whose policy gets cancelled due to non-disclosure or misrepresentation may struggle to find alternative insurance cover as he/she may either be blacklisted or be considered an undesirable risk.
OSTI recognises that financial hardships may lead to consumers withholding or misrepresenting information. However, OSTI cautions against doing so because the rejection of a claim or cancellation of a policy by an insurer may lead to further financial strain.
When taking out a policy, consumers sometimes misrepresent the details of the regular driver, their insurance history, security requirements, criminal records or the use of their vehicles. The non-disclosure or misrepresentation of this information causes insurers to insure a consumer they would not have insured had they been correctly informed or to charge the incorrect premium.
When a claim is lodged, consumers sometimes provide incorrect or inconsistent versions of the events leading up to or during an incident, inflate their claims or refuse to give their insurers access to information that could affect the outcome of the claim, such as information about their whereabouts or alcohol consumption. Insurers may end up not being able to validate the claim and declining the claim or using other means to get the information.
Consumers often consider it unfair that insurers only validate their information at claims stage. However, it must be remembered that insurance policies are contracts entered into on the basis of good faith. It is the consumer’s duty to provide complete and accurate information which insurers then rely on to underwrite the cover.
Furthermore, consumers should not underestimate the role of independent witnesses, expert evidence, vehicle tracking data, bank statements, cell phone records, medical records, police reports and call recordings, all of which insurers can rely on to validate a claim.
OSTI case study dealing with misrepresentation at sales stage
A policyholder mentioned, during the sale’s conversation, that his son would be the regular driver of the insured motor vehicle and that the vehicle would occasionally be used for business purposes. However, later in the conversation, the policyholder noted himself as the regular driver and insured the vehicle for private use. The consultant informed the policyholder that his son must not drive the vehicle more than him because the policyholder had noted himself as the regular driver.
The insured vehicle was damaged in a motor vehicle accident whilst being driven by the policyholder’s son. The policyholder reported the accident to the insurer and submitted a claim.
During the investigation of the claim, the policyholder and his son informed the insurer’s appointed assessor that the policyholder’s son had been the regular driver of the insured vehicle since the policy started and that he had used the vehicle for business purposes. The assessor also interviewed a colleague of the policyholder’s son. The colleague confirmed that the policyholder’s son drove the vehicle and used it for business daily.
The insurer advised that it would not have accepted the risk had the correct facts been disclosed to it. The insurer therefore cancelled the policy from when it started and rejected the claim.
The policyholder disagreed with the insurer’s decision and argued that the insurer was aware that his son was also going to drive the vehicle for business. He also advised that a previous claim had been reported to the insurer where his son was the incident driver, and no issue was raised by the insurer regarding the regular driver.
The insurer, however, pointed out that the previous claim was not validated nor settled as the cost of repairs fell within the excess payable by the insured. The insurer also acknowledged that it had been informed that the policyholder’s son would drive the vehicle for business, however, the policyholder had indicated that this would only be occasionally, and that he would be the person driving the vehicle more often than any other person.
OSTI listened to the recorded underwriting and assessment conversations provided by the insurer and found that material facts relating to the regular driver of the vehicle were misrepresented. Moreover, the insurer’s decision to reject the claim and cancel the policy was based on information provided by the policyholder and his son to the insurer during the validation of the claim. Based on the above, OSTI concluded that the insurer was within its rights to cancel the policy and reject the claim.
A policyholder must fully disclose all matters relevant to the insurer's assessment of the risk when requesting insurance cover or updating the cover. This is founded on the insurer’s right to be informed of all the material facts to enable it to properly assess the risk. Most policies contain an obligation on the insured to provide true and complete information.
In terms of Section 53(1) of the Short-term Insurance Act 58 of 1998, insurers are prohibited from avoiding contracts of insurance unless the policyholder is found to have misrepresented information which was “likely to have materially affected the assessment of the risk under the policy concerned at the time of its issue or at the time of any renewal or variation thereof”.
ENDS
"The Ombudsman for Long-term (life) Insurance and the Ombudsman for Short-term (non-life) Insurance, together put almost R400-milion back in the hands of consumers who complained in the past financial year.
In a joint 2021 Annual Report, the Ombudsman for Long-term Insurance (OLTI) noted that R200 million was recovered for complainants while the Ombudsman for Short-term Insurance (OSTI) said the monetary benefit for consumers amounted to R197 188 388..."
OSTI's Service Charter reflects OSTI’s values and explains what a complainant and insurer can expect from the office during the registration and investigation of a complaint, and, in turn, what OSTI requires in order to register and investigate a complaint.
An increasing number of motor vehicle accident insurance claims are being rejected and disputed on the strength of a clause in insurance policies, namely the reasonable precautions clause, the Ombudsman for Short-Term Insurance (OSTI) has announced...
Honesty is the best insurance policy. Blatantly lying or omitting the truth when claiming puts you on a slippery slope. If you get caught committing insurance fraud, you not only could have a claim denied but could experience more extreme consequences...
Short-term insurance contracts operate on good faith and it is the insured’s responsibility to disclose all material facts that may reasonably be expected to enable the insurer to properly assess the risk...
The policy provided that insured valuables that are governed by the “close personal custody and control requirement”, in it means that the insured property shall be “held by, worn or attached to the insured at all times whilst in transit.”...
Please download the OSTI Press Release regarding the COVID-19 Pandemic below.
The insurance industry will have a single Ombudsman from 1 January 2020. He is retired Judge, Mr Justice Ron McLaren who brings with him a wealth of judicial experience and knowledge in dealing with and resolving insurance disputes.
Download the full press release below.
"...The report highlights a worrying trend in car insurance: an increasing pressure on you, the policyholder, to prevent loss or damage to your car by taking 'reasonable precautions'..."
Read the Eye Witness News article here: Majority of people haven't insured their household contents - Ombudsman (ewn.co.za)
"Always keeping your car in good nick and regularly serviced could well be to your advantage in the event that an insurer disputes a claim on the basis that the vehicle was in an unroadworthy state.
The Ombudsman for Short-Term Insurance recently ruled in favour of an insured who was able to produce proof that his vehicle had been serviced three days before it was in an accident.
In his Details of Complaint, the insured said his vehicle hit the rear side of a taxi that was stationary, had no hazard lights and no triangle to warn that it was stopped.
“Upon realising that the taxi was not moving, I tried to move to the next lane. An oncoming vehicle could not make way for me to overtake the taxi which then resulted in me hitting the rear side of the taxi,” said the insured.
The insurer had rejected the claim based on the assessor’s report which stated that the rear tyres were smooth, thereby rendering the vehicle unroadworthy.
The insurer said that the assessor had inspected the tyres and found that both rear tyres had excessive wear. The insurer pronounced the vehicle unroadworthy at the time of the accident and concluded that the poor condition of the tyres had directly contributed to the loss.
The insured said that the vehicle was taken for a service three days prior to the accident and the tyres were found to be in a roadworthy condition.
In the ruling, the Ombudsman said that the insurer had failed to prove that the unroadworthy tyres had caused the accident and recommended to the insurer that it settle the claim on the grounds that, as the insurer was relying on an exclusion, it had to prove on a balance of probabilities that the condition of the tyres was material to the cause of the accident, which it had failed to do.
“The insurer had not demonstrated that, if the insured had braked and the tyres were in a good condition, then the insured would have been able to avoid the accident,” said Senior Assistant Ombudsman, Darpana Harkison.
The Ombudsman considered the insurer’s findings and noted that the findings did not relate specifically to the circumstances of the insured’s accident in that they were based on generalised conclusions drawn by other experts based on other specific sets of circumstances. The insurer’s expert did not take into account the fact that the insured had been faced with and reacted to a sudden emergency.
Referring to the clause that the insurer relied on to reject the claim, the Ombudsman said: “This clause requires that the insured take steps to maintain the vehicle and considering that the vehicle was taken in for a service three days prior to the accident, this rejection reason cannot be upheld.
“In our view the insurer’s failure to prove that the unroadworthy tyres were the cause of the accident leads to the inevitable conclusion that it failed to discharge its onus of proof in relation to the exclusion being relied on in substantiation of its rejection of the claim.”
The insurer abided by the ruling and settled the claim."
Maintaining a vehicle can save a claim from being rejected (fanews.co.za)
Download the article below.
Download the article below.
Download the document below.
Download the article below.
Download the article below.
Download the article below.
Please download the article below.
Under the theme "Plan Your Money, Plant Your Future" the MSWSA2023 campaign focuses on raising awareness about the importance of planning one’s finances for a financially sound future. The Financial ombud offices hosted a joint webinar as part of their campaign. You will hear from each office on how to secure and safeguard your financial future. We cover insurance, banking, advisory, and credit-related issues.
Listen to the interview by clicking below.
Vuyisile’s radio interview on YFM was done as part of OSTI’s Youth Month Public Relations campaign.
Vuyisile’s radio interview on YFM was done as part of OSTI’s Youth Month Public Relations campaign.
Chief Executive Officer of the Ombudsman for Short-Term Insurance, Edite Teixeira-McKinon, and the Director of Kapara Insurance Brokers, Morag Dover, join Bryan Hirsch in studio to discuss the insurance industry including power surge claims due to load shedding.
WATCH: The insurance industry and power surge claims due to load shedding: Part 1 - YouTube
The Ombudsman for Short-term Insurance discusses the recent flood damage to homes in KZN and homeowner’s insurance in general. Why claims may be declined and what consumers could do to avoid problems when claiming. View the interview here Yilungelo Lakho | 03 May 2022 - YouTube
View the ENCA interview here: KZN Floods | Unpacking insurance policy covers - Banoyi.com
A consumer workshop, addressing trending complaints, hosted by the Ombudsman for Short-Term Insurance (OSTI) featuring guest speakers from the Office of the Ombud for Financial Services Providers (FAIS), the Motor Industry Ombudsman of South Africa (MIOSA), the Ombudsman for Long-Term Insurance, The Credit Ombud, The Consumer Goods and Services Ombud (CGSO) and the Johannesburg Ombudsman.
The offices of the Ombudsman for Short-term Insurance (OSTI) and Long-term Insurance (OLTI) hosted a joint Consumer Workshop on 26 August 2021. The panel discussed:
For further information, please email [email protected] (Short-term Insurance) or [email protected] (Long-term Insurance). Media enquiries may be emailed to [email protected]
A training workshop presented by Senior Assistant Ombudsman, Mr. Peter Nkhuna, for the Insurance Institute of South Africa (IISA) on 28 July 2021 regarding OSTI's investigation and decision making process, particularly the application of fairness and equity.
The Ombudsman for Long-term Insurance (OLTI) and the Ombudsman for Short-Term Insurance (OSTI) recently had what it calls a “soft amalgamation” and have collaborated under the banner of “The Insurance Ombudsman” to bring you this production, which covers hints on funeral policies, credit life insurance, and case studies on motor insurance and business interruption cover. The production explains who or what is the ombudsman, what it does, and how it is done. It also reveals the ombudsman in action.
The Ombudsman for Long-term Insurance (OLTI) and the Ombudsman for Short-Term Insurance (OSTI) recently had what it calls a “soft amalgamation” and have collaborated under the banner of “The Insurance Ombudsman” to bring you this production, which covers hints on funeral policies, credit life insurance, and case studies on motor insurance and business interruption cover. The production explains who or what is the ombudsman, what it does, and how it is done. It also reveals the ombudsman in action.
"When times are hard and consumers find themselves in a tight financial situation, and they are forced to cut down, research shows that the first things consumers cut, to free up funds, is insurance. But is it a clever move?"
Each matter is dealt with on its own merits and no precedent is created by the findings in these matters. The case-studies are intended to provide guidance and insight into the manner in which this office deals with complaints.
Click on the Report date you would like to download |
|
| OSTI Annual Report 2020 Microsite | |
| OSTI Annual Report 2019 Microsite | |
|
2022 |
|
2021 |
|
2020 |
|
2019 |
|
2018 |
|
2017 |
|
2016 |
Click on the date you would like to download |
|
|
2022 |
|
2021 |
|
2020 |
|
2019 |
|
2018 |
|
2017 |
|
2016 |
If you would like to subscribe to receive our publications, free of charge, simply email us at [email protected] and provide us with your contact details, or fill out the form below.
Additionally you can also subscribe to our RSS feeds
