Policyholder Protection Rules oblige insurers to play nice

FOR IMMEDIATE RELEASE
(Free-Press-Release.com) April 4, 2011 -- Rules help control the fun, especially when your insurer plays Go Fish with your claims. The new Policyholder Protection Rules (PPRs) that came into effect the beginning of this year, require all insurers to respond to claims within a reasonable amount of time and justify all rejected claims in plain language. This means more transparency on the part of the insurer, but less opportunity for the consumer to appeal rejected claims.

According to the Ombudsman for Short-term Insurance (OSTI), Brian Martin, “the policyholder does not have a right to appeal an insurer’s decision. However, if the insurer rejects liability for a claim it must give reasons for the rejection.” By giving reasons for rejected claims, though, the insurer affords the policyholder the opportunity to prove their case. “The policyholder [can] make representations to the insurer regarding its decision to reject the claim or dispute the quantum of the claim, within a period of no less than 90 days after date of receipt of the notice of rejection. In short, the insured is entitled to know what case it is that they must meet.”

A reasonable amount of time
This notice must be given to the insured within a reasonable time, according to the PPRs. This will vary on a case by case basis. “What this may constitute will depend upon the facts and circumstances of the claim. The previous rule did not make provision for a period within which the insurer should object, accept or dispute the quantum of a claim,” continues Martin. “Obviously the more complex the matter in question, the longer the period of time which an insurer will have within which to investigate the matter and form a view thereon.”

All legally rejected claims, that is claims that are not covered by the policy, fall within the exclusions of cover or result after the policyholder failed to meet some of the conditions of the policy, must be delivered timeously to give the insured the chance to take the matter to the relevant Ombudsman. In fact, all rejected claims must appear with advice from the insurer of the insured’s right to recourse and how to exercise it.

Insurer’s transparency

“The policyholder is also to be advised of his right to file a complaint with any Ombudsman who is recognised in terms of the Financial Services Ombud Schemes and to furnish the policyholder with information regarding the relevant provisions of the Act in regard to the lodging of complaints,” says the Ombudsman.

After the policyholder has informed the insurer of his decision to appeal the claim with an Ombudsman, the insurance company must give written notice of their final decision within 45 days. After this, there is a six-month period to allow for legal proceedings against the insurer before a claim prescribes.

According to Martin, the new PPRs will be enforced by the Ombudsman along with the South African Insurance Association’s Code of Conduct. In each case, the Ombud will determine if these two governing documents have been met by the insurer, further protecting the rights of the insured.

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