Insurance complaints drop for the first time

Insurance complaints drop for the first time | Insurance Business New Zealand

Insurance complaints drop for the first time
Complaints against insurance companies have dropped by a third in the half year from July to December 2014, according to Financial Services Complaints Ltd (FSCL).

The disputes resolution scheme, which is the largest of the four schemes in terms of membership, said there were 28 cases opened in that period compared to 37 in the corresponding period of 2013.

FSCL CEO Susan Taylor said there could be several reasons for the reduction, but she also warned it could be an anomaly.

“It may just be that they’re [insurance companies] getting better at dealing with complaints internally, and doing a better job of settling complaints directly with the customer,” she told Insurance Business.

“Complaints had been increasing until this last half year so it could just be a blip. They do go up and down for no apparent reason, and since January we’re already up to 20 insurance complaints so it looks like this next six months of the year we’re going to be up again.”

FSCL deal with complaints involving a range of participants from insurance companies, lenders, card issuers, and trustees, to insurance brokers, mortgage brokers, credit unions and timeshares.

Insurance broker complaints had remained steady at eight compared to nine last year.

Taylor said the majority of complaints involving insurance companies were to do with travel insurance.

“The usual type of complaint is perhaps the cover has been more restricted than the customer realised, or the claim might have been declined for non-disclosure of a pre-existing medical condition.

“Some policies restrict the length of the trip for example if they only cover up to a 35 day trip and you go on a trip for 40 days you don’t have any insurance cover at all which customers unfortunately don’t often realise and become very shocked when they find out.”

She said the claims against insurance brokers tended to be more about giving unsuitable advice or sometimes negligence.

“So for example, someone might complain that they were sold the wrong type of policy or weren’t told the policy doesn’t cover certain events or situations.

“Businesses particularly, they might have thought they had cover for certain legal costs perhaps and they haven’t.”

Taylor said there would always be complaints, because there would always be situations where claims were declined if insurers didn’t think the claim fit within the policy, but in the five years since FSCL had been up and running new attitudes were definitely evident.

“We are still concerned that there is very low consumer awareness but we are seeing participants now taking complaints a bit more seriously,” she said.

“They’re starting to recognise when there are complaints and understanding that they can actually be quite a valuable business tool as opposed to something to be feared.

“We’re also seeing a little bit more willingness to capture the data they can obtain from complaints and more willingness to cooperate in the process. There’s still work to do but it’s going in the right direction.”

Taylor said they provide participants with training to prevent complaints escalating to the level of needing to get a dispute resolution scheme involved.

“That’s what we always joke with people, ultimately we aim to put ourselves out of business!”

She added that a new website design due to be launched imminently will provide access to complaint handling resources via a ‘participants only’ section, and a new information sheet to give to customers would be ready soon too.