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Homeowners insurance
| Date: |
18 November 2010 07:00 |
| Producer: |
Sophia Phirippides
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| Presenter: |
Bongani Bingwa
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| Show: | Carte Blanche Consumer |
[On phone to a bank call centre] Woman 1: 'I want to tell you that I have sent one, two, three, four... four faxes to you guys, and nobody can tell me if you have received them.'
[On phone to a bank call centre] Woman 2 (Call agent): 'When were the documents sent through, George?'
[On phone to a bank call centre] George: 'I sent the documents on the 4th. And then I called afterwards to confirm - on the 9th - if the documents were received, and then I was told that the documents were not received.'
These are actual calls made to banks in an attempt to complete what should be a simple transaction.
[On phone to a bank call centre] Woman 3 (Call agent): 'Umm... I still cannot find them.'
[On phone to a bank call centre] Woman 4: 'No, it's impossible - it was sent to you on the 4th and the 8th. I can see them in my Sent Items.'
[On phone to a bank call centre] Woman 3: 'Can you re-send it for me? Let me quickly do it for you.'
[On phone to a bank call centre] Woman 4: 'Okay, I'm sending it now again.'
These people are trying to cancel homeowners insurance, when a client has been double-insured, or simply wants to use a preferred insurance company instead of the bank's. Insurance intermediary Esté Digue's company does this on a daily basis - and it's a full-time job for several people.
Esté Digue (Insurance intermediary): 'We're just one insurance intermediary in this industry in South Africa. For the first 10 months of this year, we've made in excess of 2 700 phone calls just to the bank cancellation departments of banks, this year. The duration of it is in excess of 200 hours. This excludes the 6 000 emails we've sent, only pertaining to assisting clients in cancelling their bank's in-house insurance.'
Businessman Arno Laubscher has been down the same road. Having decided to invest in property in his home town of Nelspruit, he wanted to keep all his insurance under one roof. But there were problems from the start.
Arno Laubscher (Businessman): 'I never got my statements from Absa for about three years. They send out quarterly statements.'
But because the bank had been sending statements to the wrong address, he didn't pick it up for over three years.
Arno: 'And when I got the second or third statement, I saw this amount that went off my bond.'
It was for homeowners insurance that the bank had added, despite the fact that Arno had told them that he wanted to insure through his preferred insurance company.
Arno: 'So I was double-insured. And that's when I started enquiring. So it was about four years after I had bought the property.'
Bongani Bingwa (Carte Blanche Consumer presenter): 'When you apply for a bond, it goes without saying that you have to get homeowners insurance. But what most people don't realise is that you don't have to take the one being offered by the bank - instead, you can shop around for the best deal.'
This was just one of the precepts of the National Credit Act which came into effect in 2007: banks are obliged to inform their clients of their rights, and allow them to choose their insurance company.
Arno: 'I give all that sort of stuff to one insurer so I know everything is together, and when I go through on a six-monthly basis I know I can handle everything.'
Brian Martin is the Short Term Insurance Ombudsman, and it's his job to settle disputes - when they arise - between the Short Term Insurance industry and their clients.
Brian Martin (Ombudsman: Short Term Insurance): 'In my experience one of the biggest problems is people get given policies, they get given contracts and they don't fully read these things and understand them. They just assume that everything is in order. But certainly there are obligations upon the insurer or the broker and, of course, the bank, when these contracts are taken out to make certain disclosures.'
Arno says that, despite doing everything by the book, he found it very hard to even get a copy of the policy from the bank.
Arno: 'And after I don't know how many weeks of trying to get this out of them, they eventually sent me a policy and it's signed by 'Die Takbestuurder'. And I can't read his signature, I don't know who he is, I don't know which branch it is from, I've got no idea... who is he? They still carried on with I have to get my outside insurance in place. It has got nothing to do with my outside insurance; it's got to do about the fact that they took money from me without my permission.'
Brian: 'If you have fulfilled your obligations in terms of your bond agreement, the bank has no authority to debit your account with anything.'
Bongani: 'Although Arno Laubscher's fight was with ABSA Bank, from the complaints we've received, there seems to be a problem across all the major banks.'
The allegations are that not only are banks remiss in informing their clients that they have an option to source their own homeowners cover, but also that when the savvy applicant removes the clause from the application form, this is somehow ignored. We spoke to three banks asking them to clarify their positions. ABSA say that they will cancel their in-house policy if the client's replacement policy meets their minimum requirements. Nedbank say they give clients 21 days grace to provide proof of cover. Standard Bank state that when clients are double-insured, the industry norm is that each insurer refunds 50% of the premium.
Nelspruit bond originator, Johan Jansen van Vuuren, helped Arno with his bond, as he had with his other properties. He believes that banks should act in good faith and provide better customer service.
Johan Jansen van Vuuren (Bond originator): 'The bank has the responsibility to contact the client regarding the provision of alternate homeowners insurance in order to ascertain whether they are happy with the conditions of that specific policy.'
Bongani: 'So, let's say the banks' mistake happens in just 10 000 accounts, how many account holders would pick it up, have the patience and the will to go through the call centres - making phone calls, exchanging emails, and even know what a fair result should be? So basically, through your ignorance, the banks could score.'
Esté: 'If you look at the annual financial statements of banks, the contribution to their profit annually from insurance is vast. We... depending on the bank, it could be in the region of 10%. So clearly it would be in the best interest of the bank to try and maintain the portfolio.'
And despite the levelling of the playing field under the National Credit Act, banks still retain around 98% of the home loan insurance business.
Esté: 'In the pack that you sign at the attorneys, when you sign for the bond there is always an insurance document. You are signing zillions of pages that day - and mostly the attorneys do take you through the process. Even if you tell the attorney, 'This is my insurance, I'm opting for my own insurance,' and he includes it, if you mistakenly signed a page about the insurance, they will issue it because you signed for it.'
Bongani: 'In all fairness, Brian, I mean, most people will just be happy to get their bond approved and registered and so on... shouldn't they think it should be fine?'
Brian: 'Well, it's a question of how far do you want to take these things. Do we live in a nanny-state where you are going to spoon-feed people at every opportunity? You know, you can only claim ignorance up to a certain point.'
But Esté believes that red tape is blocking the rights of consumers.
Esté: 'Since the five years that this Act has been implemented, very little has changed from a bank's operational perspective to accommodate the right of the client's choice of insurance. And as much as it is said that the client has got a choice, as difficult it is to effectively exercise that choice.'
Esté and her associates found they were spending so much time chasing the banks that they had to set up a special call centre to make sure that their clients' requests for alternate insurance had been processed by the banks.
Esté: 'On average per client we are currently sitting on about seven calls, up to 10 and 12 emails. This is down now from a process that used to take between two and five months three years back. So clearly there is improvement, but still, compared to a standard cancellation instruction in the insurance industry it does not nearly compare.'
Arno: 'I had to go to my outside insurer to go and talk to him. He helped me a lot to argue; he actually made a few phone calls to the bank to argue this issue with them as well... and that it's time.'
Johan: 'They want clients, but they are purely interested in protecting their own interests. And I feel that this is not fair towards the consumers who actually keep their business going. If we could have a more favourable approach to looking at the interests of the consumer out there, they would probably be able to save millions in terms of administration.'
Esté: 'It is not a fair process. It is an extremely cumbersome process. That is effectively the reason why clients sometimes just give up.'
But Arno didn't give up. He embarked on an email blitz campaign that targeted the members of the bank's board, threatening them with media exposure.
Arno: 'Then after that I got a call from the CEO's office and things started happening. And they eventually... after about 10 weeks... they paid me back the full amount with interest.'
After four years of paying extra on his homeowners insurance, Arno received a refund of almost R10 000.
Brian: 'There are difficulties of course, but, you know, one has to be persistent when it comes to these kinds of things. Any large organisation is going to tend to be very bureaucratic and inefficient.'
IMPORTANT DISCLAIMER:While every attempt has been made to ensure this transcript or summary is accurate, Carte Blanche or its agents cannot be held liable for any claims arising out of inaccuracies caused by human error or electronic fault. This transcript was typed from a transcription recording unit and not from an original script, so due to the possibility of mishearing and the difficulty, in some cases, of identifying individual speakers, errors cannot be ruled out.
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