 organisation
chart
the structure
within the Financial Ombudsman Service
the board
board members of the Financial Ombudsman
Service
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resolving
insurance-related disputes
The insurance division of the Financial Ombudsman Service resolves disputes
between consumers and insurance companies about general insurance (for
example, motor and household insurance, travel insurance, loan protection
and medical expenses policies). The Financial Ombudsman Service carries
out this work on behalf of – and under the rules of – the Insurance
Ombudsman Bureau (the IOB).
The
disputes that the insurance division deals with are general insurance
complaints which insurance companies have not been able to resolve themselves.
By this stage, the complaints will have been “screened” by our customer
contact division, to check that all opportunities to resolve them at
an early stage have been pursued. Complaints involving life insurance
and investments from insurance companies are dealt with by our investment
division.
Membership
of the IOB is voluntary. As at 31 March 2001 there were 231 members.
A full list of members is available from our communications
team (phone 020 7964 0092). In practical terms, almost all major
UK general insurers are members of the scheme. When the Financial Services
and Markets Act 2000 comes into force – expected by November 2001 –
the Financial Ombudsman Service will be able to handle insurance-related
complaints about all authorised insurance companies in the UK.
The
insurance division has 56 staff – including a principal ombudsman (Tony
Boorman, who is also the Insurance Ombudsman under the rules of the
Insurance Ombudsman Bureau) and three other ombudsmen (Reidy Flynn,
Stephen Lilley and Michael Lovegrove).
general
insurance regulation
The conduct of general insurance business is regulated by a new organisation,
the General Insurance Standards Council (GISC). We have worked closely
with GISC during the year to help it develop its rules and, in particular,
its new Code for Private Customers. This code will in due course replace
the Association of British Insurers’ (ABI) Code as a statement of the
obligations of the industry when selling general insurance products.
As the membership of GISC grows, the new code will play an important
part in our consideration of many disputes.
We
also commented on the new ABI Claims Code. This provides for standards
to be maintained by firms when handling claims. Particularly welcome
was the inclusion of obligations towards third party claimants. In due
course it would seem sensible for the Claims Code to come under the
scope of GISC.
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FROM
the Chairman
....................
Council of the
Insurance Ombudsman Bureau
Maurice Healy OBE
June
2001
We
have always been anxious to hand over our work to the Financial
Ombudsman Service in an orderly way, so that our service to
our member insurers and to policyholders who have a dispute
with them can continue with as little disruption as possible.
So
far as day-to-day practicalities are concerned, this has now
been effectively achieved. For more than a year, the staff
have been employed by the Financial Ombudsman Service, where
they are working alongside their colleagues from the other
financial sector complaints-handling schemes. The Financial
Ombudsman Service has contracted with us to provide our services
to levels of quality that we have mutually agreed. The Council's
remaining task is to monitor the Financial Ombudsman Service's
performance against those standards. I am glad to be able
to report that the quality of decision-making under Tony Boorman's
leadership remains high and that the investigation of cases
continues to be carried out to high standards of productivity
and timeliness. The Council was delighted to be able to appoint
Michael Lovegrove, Stephen Lilley and Reidy Flynn as Insurance
Ombudsmen.
The
Council has been particularly glad to see the development
of improved and effective systems for dealing with enquiries
from policyholders wishing to use the ombudsman service. We
are glad too, that the Financial Ombudsman Service has taken
up and developed the initiatives we pioneered in providing
information and guidance to insurers and consumer advisers.
I
should like to pay a tribute to all those involved in what
has been a highly complex administrative change. In particular,
I should like to record the Council's gratitude to the staff
for the positive way they have approached the uncertainty
and disruption of moving and changing their conditions of
employment. We have lost some valued colleagues and, of course,
the change caused some problems. But the staff have made their
farewells to the South Bank and re-established in Docklands
in good heart.
It
now seems certain that IOB will cease to function and the
Council will disappear in the autumn. But the work the IOB
started as the first of private sector ombudsman schemes in
1981 will go on. Our history is being recorded in the research
project being carried out by Peter Tyldesley at the Guildhall
University. The German insurance industry has decided to establish
a scheme based on our experience after coming to see us last
year. Most important is of course, the work of the Financial
Ombudsman Service itself. We wish it well.
Maurice
Healy
Chairman
Council of the Insurance Ombudsman Bureau
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new cases
In the year ended 31 March 2001, the insurance division received 6,559
new insurance-related cases, a 7% decrease on the 7,061 new cases received
in the year ended 31 December 1999*.
new
cases about general insurancence
by subject matter |
| |
year
ended
31 March 2001
|
year
ended
31 December 1999*
|
percentage
change
|
| motor
|
1,989
|
2,317
|
-14%
|
| buildings
|
927
|
1,029
|
-10%
|
| contents
|
868
|
983
|
-12%
|
| loan
protection |
711
|
792
|
-10%
|
| travel
|
778
|
756
|
+3%
|
| warranty
|
366
|
255
|
+44%
|
| personal
accident |
197
|
193
|
+2%
|
| legal
expenses |
152
|
161
|
-6%
|
| medical
expenses |
194
|
152
|
+28%
|
| other
|
377
|
423
|
-11%
|
| total
|
6,559
|
7,061
|
-7%
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| *
The IOB has traditionally used a December year-end, and its last published
annual report covered the year from 1 January to 31 December 1999.
This consolidated annual report published by the Financial Ombudsman
Service covers the period from 1 April 2000 to 31 March 2001 – the
formal reporting period for most of the Financial Ombudsman Service’s
constituent schemes – so it does not include complaints figures for
the IOB relating to the first quarter of 2000. For the sake of statistical
completeness, 1,842 new cases were received by the IOB during the
three month period, 1 January to 31 March 2000. |
There was
a particularly welcome decrease in the number of cases received involving
motor policies. This reflected in part the greater emphasis on the resolution
of straightforward matters at the initial enquiry stage by staff in our
customer contact division.
Less positive
was the significant increase in disputes about warranty insurance. These
products, usually covering the cost of repairs to certain household products
such as televisions and furniture, appear to represent an increasing cause
of problems for many customers. In over a half of the cases we investigate
involving warranty policies, we conclude that the complaint should be
upheld in full or in part – compared to less than 40 per cent on average
for all policy types.
The increase
in cases about medical expenses policies (private medical insurance) partly
reflects the expansion of the IOB membership to cover all major medical
expenses insurers. In addition, it is clear that issues such as the distinction
between chronic and acute conditions – which we discussed in the January
2001 edition of ombudsman news – are of concern to many customers.
The 7% fall
in the overall number of complaints received in the year ended 31 March
2001, compared with the year ended 31 December 1999, is the result of
the record level of new general insurance cases reported by the IOB in
1999. This followed a change in the IOB’s procedures, to make access more
straightforward for customers.
resolved
cases
We settled more general insurance cases than we received – closing 7,128
cases between 1 April 2000 and 31 March 2001 (and 2,004 cases in the period
from 1 January to 31 March 2000 – see the footnote
). Of these cases, the majority required detailed investigation by
our adjudicators and 13% needed to be resolved by the formal exercise
of the ombudsman’s powers.
The figures
for 1999 were collected by the IOB on a different basis from that now
used by the Financial Ombudsman Service, so a direct comparison between
the two years should be treated carefully. However, there has been an
increase both in the number of cases being investigated and in the proportion
of cases where we uphold the complaint in whole or in part.
For the year
ended 31 March 2001, 62% of cases were closed within six months; 32% took
between six and twelve months; and 6% took over twelve months.
| outcome
of cases about general insurance* |
|
year
ended 31 March 2001
|
year
ended 31 December 1999**
|
| resolved
by conciliation or mediation (agreed voluntarily by both sides) |
25%
|
26%
|
| resolved
after investigation by an adjudicator |
62%
|
59%
|
| in
favour (in whole or part) of the customer |
23%
|
18%
|
| in favour
of the insurance company |
39%
|
41%
|
| resolved
by the final decision of an ombudsman |
13%
|
15%
|
| in favour
(in whole or part) of the customer |
7%
|
7%
|
| in favour
of the insurance company |
6%
|
8%
|
|
100%
|
100%
|
|
|
|
|
* In
order to present statistics as consistently as possible, in a format
which allows comparison with similar figures from the other complaints-handling
schemes, some information which was included in past annual reports
of the Insurance Ombudsman Bureau is not covered in this consolidated
report. However, this data can be made available on request for
research purposes.
**
The IOB has traditionally used a December year-end, and its last
published annual report covered the year from 1 January to 31 December
1999. This consolidated annual report published by the Financial
Ombudsman Service covers the period from 1 April 2000 to 31 March
2001 – the formal reporting period for most of the Financial Ombudsman
Service’s constituent schemes – so it does not include complaints
figures for the IOB relating to the first quarter of 2000. For the
sake of statistical completeness, 1,842 new cases were received
by the IOB during the three month period, 1 January to 31 March
2000.
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The work
of the insurance division is featured in the quarterly insurance division
issues of ombudsman news which replace the three-monthly Bulletins
formerly published by the IOB. Ombudsman news provides feedback
on the types of complaint handled over the preceding quarter and reports
on some of the major themes that have emerged. The publication includes
case studies and commentary.
We hope that
ombudsman news will provide a helpful source of reference and that
our views will feed directly into firms’ own handling of complaints. Please
contact our communications team (phone 020 7964 0092) if you would like
to go on our mailing list to receive future copies.
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