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COMMENTS
TO THE REVIEW
In
making our comments to the Review we draw on the knowledge and experience
from bureaux’ client contact and the fact that, nationally, bureaux
deal with an average of 3,500 insurance-related enquiries every
year.
The
Association is generally satisfied with the ISO scheme. Our
bureaux are aware of the scheme, and often refer clients to the
Ombudsman. We do have some specific areas of concern, which
are outlined below, in the areas of amendments to the scheme, its
claims ceiling, coverage of the scheme, innocent non-disclosure,
and promotion of the scheme. We make specific recommendations
to the Review relating to those issues.
The
Association endorses the submissions of the Consumers’ Institute
and the Ministry of Consumer Affairs.
Amendments
to the scheme
The
Association agrees with the Consumers’ Institute statement that
“one of the advantages of an industry-based complaints scheme is
the ability to keep pace with changes in business practice and consumer
expectations.”* The ISO scheme
needs to be flexible and should respond to change quickly to ensure
it keeps up with best industry practice and the needs of consumers.
*[Consumers' Institute, August 2002, Consumer (417)]
The
Association considers that some of the processes of the scheme are
too onerous and slow, and therefore risks loosing the confidence
of consumers and consumer representatives. A recent amendment
to the ISO terms of reference, for example, took three years to
be approved. That example demonstrates that some participants
are undermining the integrity of the scheme through obstructive
actions.
The
Association recommends that the Review examine ways in which the
processes of the scheme, including timeframes for scheme amendments,
could be improved to ensure its continued responsiveness to the
needs of consumers. In this regard we suggest the Review consider
other models that might be employed for making amendments to the
scheme – for example, the process used by the Electricity Complaints
Commissioner scheme.
Claims
ceiling
The
Association considers that the claim ceilings of $100,000 and $750
per week for disability are too low. Indeed, the Banking Ombudsman
is able to hear complaints relating to the provision of banking
services in relation to insurance for amounts up to $150,000.
Further, the Association believes the ISO should be able to award
compensation for inconvenience and suffering (both the Banking Ombudsman
and Electricity Complaints Commissioner, for example, have this
power).
The
Association recommends that the Review investigate an appropriate
ceiling, and examine formulas that would allow the ceiling to be
adjusted to keep pace with average house prices and inflation.
The
Association recommends that the ISO be given the power to award
compensation for inconvenience and suffering.
Coverage
of the scheme
The
Association considers that the coverage of the scheme could be extended
to include small businesses and workplace superannuation schemes.
Citizens
Advice Bureaux receive enquiries from small businesses as well as
individuals. Many of these businesses are small enough that
they could be compared to a household. They might be, for
example, a self-employed accountant working from home. The
Association feels there is no good reason why such small businesses
should be excluded from protections offered from the scheme.
The
Association considers it anomalous that personal superannuation
policies are covered by the scheme, whereas workplace policies provided
by the same participants are not.
The
Association recommends that the Review investigate extending the
scheme to cover small businesses and workplace superannuation policies.
Innocent
non-disclosure
Many
cases to the ISO* relate to non-disclosure
of material facts. It is likely that many customers are not
aware that their policy may be avoided because of some information
they haven’t disclosed, especially when they wouldn’t consider that
information to be critical to them being insured. The ISO
does not uphold complaints relating to innocent non-disclosure,
even when the complainant has not acted fraudulently; the terms
of reference do not allow the ISO to uphold these complaints.
This is of major concern to the Association, and we recommend that
the Review seek amendment to the terms of reference to provide that
participants agree not to avoid or cancel a policy for innocent
non-disclosure. *[Office of the Insurance and Savings
Ombudsman, 2001, Casebook, 1 January 2001-31 December 2001]
Further,
because this is clearly a fundamental problem area, the Association
believes that companies must put more effort into clearly communicating
what is important to disclose when policies are established or renewed.
The Association recommends that the Review examine a range of ways
in which participants could more effectively obtain all material
information for the policy.
Promotion
of the scheme
Many
of the 3,330 insurance-related enquiries to Citizens Advice Bureaux
in the 2001-2002 year were in regard to questions about why a claim
was denied or a policy avoided. In many of these cases bureaux
discussed the complaints process and also referred
the client to the ISO. This demonstrates that the companies
themselves did not make their customers aware of the ISO scheme.
This is further supported by research undertaken by the ISO.
The
ISO surveys each complainant and asks how much information they
received from their company about its own internal complaints procedure
and the ISO scheme. Only a quarter (24%) of the respondents
felt they were given enough or more than enough information
about the company’s internal complaints procedure, while less than
half (43%) felt they were given enough or more than enough
information about the ISO scheme. [Office of
the Insurance and Savings Ombudsman, July 2002, Assessment (8)]
We
endorse comments made by the ISO in regard to promotion of the scheme:
A
customer-focused approach to complaints handling means that the
procedures should be publicised and Participants’ staff should
know about them. A Participant’s membership of the ISO Scheme
should be of interest to consumers, because a free dispute resolution
service adds value to the relationship. For that reason,
we believe Participants should want to publicise their complaints
handling procedures and the service offered by the ISO Scheme.[Office
of the Insurance and Savings Ombudsman, July 2002, Assessment
(8)]
The
Association recommends that the Review examine a range of ways in
which participants could more effectively promote the scheme.
SUMMARY
The
Association makes the following recommendations to the Review:
Amendments to the scheme
- That
the Review examines ways in which the processes of the scheme,
including how amendments to the scheme are made, could be improved
to ensure its continued responsiveness to the needs of consumers.
Claims
ceiling
- That
the Review investigates an appropriate ceiling, and examines formulas
that would allow the ceiling to be adjusted to keep pace with
average house prices and inflation.
- That
the ISO be given the power to award compensation for inconvenience
and suffering.
Coverage
of the scheme
-
The Association recommends that the Review investigate extending
the scheme to cover small businesses and workplace superannuation
policies.
Innocent
non-disclosure
-
That
the Review seeks amendment to the terms of reference to provide
that participants agree not to avoid or cancel a policy for
innocent non-disclosure.
- That
the Review examines a range of ways in which participants could
more effectively obtain all material information for the policy.
Promotion
of the scheme
-
That
the Review examines a range of ways in which participants could
more effectively promote the scheme.
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