Insurers may now appeal ombudsman’s rulings
Your short-term insurer is bound by “final rulings” handed down by the Ombudsman for Short-term Insurance (Osti) and does not have the right to appeal these rulings. Nor do you, as a policyholder, have the right to appeal the Osti’s rulings – but you are free to take your insurer to court if you aren’t satisfied with the outcome of a complaint to the ombudsman. However, this would be at your own expense.
But as of next month short-term insurers and consumers will be able to apply for leave to appeal a final ruling handed down by the Osti, ombudsman Dennis Jooste announced this week.
Most complaints handled by the Osti are resolved by mediation or non-binding recommendations, but a final – or a formal – ruling is one that is binding on the insurer but not on the policyholder.
Jooste says the introduction of an [internal] appeal tribunal is good news for consumers. “It can only be to the advantage of the consumer, because the consumer gets another free bite at the cherry,” Jooste says.
It does not cost you anything to lodge a complaint at the Osti, but it does cost your insurer. The Osti’s office charges the insurer a fee per complaint submitted, and the revenue generated covers the costs of the ombudsman’s office.
The Osti is a voluntary scheme (as are the Ombudsman for Long-term Insurance and the Ombudsman for Banking Services), as opposed to a statutory scheme (such as the Ombud for Financial Services Providers and the Pension Funds Adjudicator). The Osti has jurisdiction over all shortterm insurers that are contractually committed to the terms and conditions of the scheme.
Both statutory ombuds allow for appeals to the Financial Services Board’s Appeal Board, and voluntary ombuds (other than the Osti) also have their own appeal mechanisms.
Barry Scott, chief executive of the South African Insurance Association, says an appeal mechanism is good practice, and its introduction is to bring the Osti in line with other ombud schemes.
“An ombudsman won’t get it right in every situation, and the industry – as well as the consumer – will sometimes have a different view.”
Jooste stresses that both insurers and consumers will be entitled to appeal a final ruling “provided that leave to appeal is granted by the ombudsman”. Call Dennis Jooste, the Ombudsman for Short-term Insurance, on 0860 726 890. Or you can fax to 011 726 5501 or email email@example.com
According to the rules that apply to appeals, which can be found at www.osti.co.za, the ombudsman will grant leave to appeal only where he is of the opinion that:
◆ There is a reasonable prospect that the appeal, either in whole or in part, if prosecuted, will succeed; and
◆ The matter is complex or difficult; or
◆ The ruling or finding in question involves issues or considerations that are of substantial interest or importance to the public or the industry, or it is in the interest of justice or public policy that the ruling or decision is considered by an appeal tribunal; or
◆ The ruling or decision involves principles of law where the law may be uncertain or unsettled; or
◆ The matter in dispute involves the jurisdiction of the ombudsman to entertain the dispute; or
◆ The issues are of such a nature that the judgment or order sought by the appellant will not be of academic relevance only and will have a practical effect or result.
The appeal tribunal will consist of former Chief Justice Sandile Ngcobo and former Supreme Court of Appeal judges Peet Nienaber and Thomas Cloete.
Jooste says: “An application for leave to appeal must be lodged within 30 days [of the ombudsman’s ruling]. Parties may be represented at the appeal hearing at their own cost.
“The ombudsman may in his discretion call on a consumer who is the appellant to pay a deposit, which shall be refunded to the consumer if the appeal succeeds. If the appeal fails, the deposit is forfeited. However, no cost awards can be made against the unsuccessful party.”
He says he expects there to be more consumers trying to appeal than insurers.
He says the ombud finds two-to-one in favour of insurers and has a 35-percent overturn rate. The overturn rate is the rate at which insurers reverse their decisions as a result of the intervention of the ombudsman, to give some benefit to the insured.