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Insurance complaints on the rise

Published: 
Thursday, July 12, 2018
Financial Services Ombudsman:
Dominic Stoddard Financial Services Ombudsman PICTURES ABRAHAM DIAZ

Insurance complaints continued to dominate grievances against local financial institutions, the majority of which are motor-related claims. These are among the findings in the 2017 report of the Office of the Financial Services Ombudsman (OFSO) for the period January 1, 2017 to December 31, 2017.

The report includes a statistical review of the number and types of complaints processed, the time frames within which complaints were resolved and enquires received at the Office. It also highlights the number of persons visiting its offices at San Fernando, Sangre Grande, Point Fortin and Tobago.

The total number of complaints received for 2017 was 302, compared to 203 for 2016. Insurance complaints account for just over 93 per cent of the total received for the year.

“The significant increase in total complaints can be attributed almost entirely to insurance complaints,” the OFSO said.

Banking sector complaints remained characteristically low, with just 20 received in 2017— seven per cent of the total complaints—an increase from the 15 recorded in 2016.

“The increase in complaints is partly a reflection of greater public awareness and increased vigilance among financial customers,” the report stated.

The OFSO also recorded 770 enquiries in 2017, a marginal increase over 764 in 2016. These were received from various sources and were related to products and services provided by insurance companies, banks and non-bank financial institutions.

The OFSO received several enquiries about products and services provided by institutions not falling under its mandate, including the Unit Trust Corporation, credit unions and government ministries and agencies. In such instances, customers were either provided with an appropriate response to their enquiries or redirected to the relevant institutions where their matters might be addressed.

The OFSO continues to hold external office days and on those occasions 225 people visited as compared to 234 during the corresponding period in 2016.

According to Central Bank Governor Dr Alvin Hilaire, the OFSO serves as an important vanguard to the public by providing a means through which ordinary citizens and small businesses can seek mediation and redress arising out of complaints against financial institutions.

“Fundamental to every well-functioning financial system is a mechanism for recourse for the public in instances where disputes with financial services providers arise. Consumer protection, fairness and reasonable resolution remain at the core of the OFSO’s operations,” he said.

At the heart of consumer empowerment, he added, is awareness of financial products, risk, choices, rights and responsibilities. In this regard, the OFSO continues to work closely with the National Financial Literacy Programme (NFLP) to raise the level of financial education in the country and to empower citizens to make more informed financial decisions.

Financial Services Ombudsman Dominic Stoddard said the agency has accomplished a major milestone as it has been in existence for 15 years.

“It gives pause for reflection on its purpose and mandate and allows for an assessment of whether these are still valid in the light of the many changes that would have taken place in the financial sector over the years,” Stoddard said.

While the OFSO continues to play a pivotal role in the financial sector, there is still much to be done, he admitted.

“The scheme is still voluntary and not grounded in legislation. Many of the complaints received fall outside of our terms of reference and there are financial consumers whose complaints we cannot address because the institutions involved are not part of the scheme.

“In such cases, the customers are at a distinct disadvantage even where the institution in question has an internal complaints mechanism,” he said.

Despite these challenges, the OFSO continued to streamline its internal operations during 2017 by transforming its case management system.

Beta testing of the system was completed and the OFSO is now positioned to improve the level of its reporting, with an expanded range of reports and the availability of additional detailed data.

Banking services

During 2017, 22 banking complaints were addressed by the OFSO. This included two unresolved complaints brought forward from 2016 and 20 new complaints received during the reporting period.

Of those, 11 complaints were resolved by the OFSO during 2017—50 per cent of the total for processing.

In 2016, 90 per cent of all pending complaints were resolved. There were 11 unresolved complaints that continued to engage the attention of the OFSO and the relevant commercial banks at the end of 2017.

The OFSO recorded the majority of banking complaints under the four main categories: accounts and transactions, card services, loans and credit and other.

Complaints related to accounts and transactions accounted for 50 per cent of the total received in 2017, compared to 40 per cent in 2016.

“There was also an increase in the percentage of complaints related to card services in 2017 compared to the same period in 2016. Three complaints related to loans and credit were recorded in 2017, the same was recorded in 2016,” the report said.

The majority of banking complaints were resolved by agreement between the parties involved and withdrawals by complainants due to corrective action by the financial institutions.

During 2017, seven complaints were resolved under the category of agreement, while four were resolved under the category of withdrawals by complainants.

Insurance services

Between January to December 2017, the OFSO received 28 new complaints from customers against insurance companies. For the corresponding period of 2016, the number of new complaints was 188.

This represented a significant increase of 50 per cent in the overall number of complaints submitted to the OFSO.

The majority of complaints were motor related claims. The OFSO recorded 266 such complaints which accounted for 94 per cent of the total number received.

There were 13 complaints related to life or health Insurance policies and individual annuity contracts.

Categories of complaints

The OFSO has seen a marginal increase in the number of complaints about denial of claim, while complaints about inadequate settlement were virtually unchanged compared to the previous year.

One of the major issues affecting customers continues to be the amount offered for settlement of claims. This accounted for 38 per cent of the total number of complaints received.

There was also an increase in denial of claims which now accounts for 37 per cent.

The single largest decline in terms of category of complaints was in undue delays, an indication that once liability is established there is an improvement in the time taken to settle outstanding claims.

Resolution of complaints

There were 345 complaints available for processing. This included 63 unresolved complaints brought forward from 2016 and 282 new complaints .

The OFSO resolved 235 complaints which represented 68 per cent of the total for processing—a decrease compared with 2016 when 77 per cent of the complaints available for processing were resolved.

There were 110 unresolved complaints at the end of 2017. The majority were resolved by agreement and withdrawals by the OFSO.

Withdrawals included matters where the insurance companies maintained their denial of claims, complainants breached terms of their policies, or complainants or third parties chose to pursue legal action.

During 2017, 72 per cent of complaints were resolved under the category of agreement and 25 per cent were withdrawals by the OFSO. Three per cent of all complaints lodged were closed under the category of withdrawals by complainants.

The OFSO recorded similar statistics under these categories in 2016.

The OFSO resolved 123 complaints within nine days of receipt, accounting for 52 per cent of the total number of complaints resolved. This represents a decline from the 65 per cent for the same category in 2016. Eighty-seven complaints took in excess of 120 days to be resolved.

Meetings with insurance companies

The OFSO continues to receive complex insurance complaints, including some related to multi-vehicular accidents and company referrals. In an effort to resolve these matters, it engages the respective companies in extensive multi-party mediation.

During the review period, the OFSO convened 12 meetings with insurance companies, including three multi-party mediation meetings.

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