CONSUMER
2
Contents
1. The Authority to Investigate Consumer Complaints . . . . 2. Characteristics of Consumer Complaints in 2000 . . . .
a. General Remarks . . . . b. Motor Insurance—Third Party . . . . c. Life Insurance (Individual) and Executive Insurance Plans . . . . d. Health Insurance . . . . e. Motor Insurance—Insurance Benefit in the Event of Total Loss . . . . f. Misrepresentation of Insurance Transaction . . . . g. Relations among Agents, Insureds, and Insurance Companies . . . . h. Circular Prohibiting Costly Gifts . . . .
3. Principled Decisions . . . .
General Insurance . . . . Motor Insurance . . . . Relations between Insurance Agent and Insured . . . . Health Insurance . . . . Provident and Pension Funds . . . . 1. Transfer of Surplus Severance-Pay Funds to Employer by Provident Fund under
Compromise Agreement between Employee and Employer . . . . 2. One-Sided Conditions in Pension Fund Statutes and Concern about
Conflict of Interests . . . .
4. Statistical Survey—Consumer Complaints concerning Insurance, Pension Funds, Provident Funds, and Savings in 1998–2000 . . . .
a. Long-Term Trends in Level of Complaints . . . . 1. Long-term Trends in Number of Complaints about Insurance . . . . 2. Long-term Trends in Number of Complaints about Provident Funds, Pension Funds, and
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b. Categories of Decisions on Complaints . . . . 1. Distribution of Complaints in Regard to Insurance . . . . 2 Distribution of Complaints in Regard to Pension Funds, Provident Funds, and Savings . . . .5. Rankings of Automobile Insurance Companies (Property) — Comprehensive and Third-Party — by the Consumer Complaint Index . . . .
Tables
Table 8.1 Complaints Received (Insurance), 1990–2000 . . . . Table 8.2 Complaints Received (Pension Funds, Provident Funds, and Savings), 1998–2000 . . Table 8.3 Rulings on Complaints concerning Insurance, 1998–2000 . . . . Table 8.4 Rulings on Complaints concerning Insurance, Selected Lines, 1999–2000 . . . . Table 8.5 Rulings on Complaints concerning Pensions, Provident Funds, and Savings,
1999–2000 . . . . Table 8.6a Ranking of Insurance Companies by Justified and Company-Uncontested Complaints
in Motor (Property–Comprehensive) Insurance Relative to Motor Insurance
Premiums, 2000 . . . . Table 8.6b Ranking of Insurance Companies by Justified and Company-Resolved Complaints in
Motor (Property–Third-Party) Insurance Relative to Motor Insurance
Premiums, 2000 . . . .
Figures
Figure 8.1 Insurance Complaints Received, 1990–2000 . . . . Figure 8.2 Complaints Received about Provident Funds, Pension Funds, and Savings,
1998–2000 . . . . Figure 8.3 Distribution of Decisions in Insurance Complaints, 1997–2000
Figure 8.4a Complaint Files Opened in Insurance, Selected Insurance Types, 2000 Figure 8.4b Justified Complaints in Insurance, Selected Insurance Types, 2000
Figure 8.4c Complaints Uncontested by Companies in Insurance, Selected Insurance Types, 2000 Figure 8.5a Distribution of Complaints Received in Regard to Pensions, Provident Funds, and
Savings, 2000 . . . . Figure 8.5b Distribution of Decisions in Regard to Pensions, Provident Funds, and Savings,
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Figure 8.5b Distribution of Justified Complaints in Regard to Pensions, Provident Funds,
and Savings, 2000 . . . .
Appendices
Appendix 8.1 Paragraphs 60–62 of the Insurance Transactions (Control) Law, 1981 . . . . Appendix 8.2 Categories of Decisions in Consumer Complaints . . . . Appendix 8.3 How to File a Complaint . . . . Appendix 8.4 Form for Complaint concerning Insurance . . . . Appendix 8.5 Form for Complaint concerning Pensions, Provident Funds, and Savings . . . . . Appendix 8.6 Insurance Companies’ Consumer-Complaint Officers . . . .
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1. THE AUTHORITY TO INVESTIGATE CONSUMER
COMPLAINTS
Paragraphs 60–62 of the Regulation of Insurance Transactions (Control) Law, 1981 (hereinafter: the Control Law) empower the Commissioner of Insurance to investigate consumer complaints against the insurance-related actions of insurers and insurance agents. These paragraphs are presented in Appendix 8.1.
The Consumer Ombudsman Unit at the Capital Market, Insurance, and Savings Division investigates consumer complaints against insurance companies, pension funds, and insurance agents that are certified as such under the Income Tax (Rules for Approval and Management of Provident Funds) Regulations, 1964. Under the encouragement of savings laws, it also investigates consumer complaints against banks that manage savings plans.
The Commissioner of Insurance’s powers in this context are quasi-legal. Therefore, a complainee who refuses to correct an irregularity in accordance with a ruling may appeal the ruling in district court.
The investigation of the complaint ends with a ruling. Complaints are categorized in the following way1:
1. justified complaint;
2. complaint that has grounds, but the insurance company did as the complainant requested; such a complaint is categorized as “uncontested by company” or “company-uncontested”; 3. unjustified complaint or one that has been processed to its end and cannot be resolved; 4. principled complaints, in which the facts are in dispute or legal proceedings have begun. The findings that come to light in the investigation of complaints provide the Division, the companies, and the regulated entities that receive the rulings with a feedback mechanism. When the findings make it clear that a recurrent problem or a matter of principle exists, the Consumer Ombudsman Unit disseminates principled rulings and investigates the regulated entities in depth2.
1 See Appendix 8.2 for itemization and categorization of the rulings.
2 See the 1999 report of the Commissioner of the Capital Market, Insurance, and Savings for a detailed account
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2. Characteristics of Consumer Complaints in 2000
A. General Remarks
In 2000, the Consumer Ombudsman Unit received 3,014 consumer complaints about insurance. As in 1999, a large majority of complaints (93 percent) pertained to this field. The steady uptrend in the number of complaints presented to the Unit continued—a hefty 21.3 percent increase in 2000 over 1999, after a 13.3 percent upturn in the previous year (Table 8.1). The rate of increase in complaints submitted between 1995 (1,381 complaints) and 2000 (3,014 complaints) was 118 percent, about 20 percent on annual average.
The number of consumer complaints related to provident funds, pensions, and savings, in contrast to insurance, was almost unchanged in 1995–2000, at 200–250 complaints on average (Table 8.2).
B. Motor Insurance — Third Party
Although the Consumer Ombudsman Unit acted intensively in 1999 in handling complaints against insurance companies and their claims-processing centers due to a proliferation of complaints about motor insurance and, especially, third-party events, these were the major fields that required our intervention in 2000 as well.
Just the same, the share of justified and company-uncontested complaints in total complaints resolved decreased by 16 percent in 2000 relative to 1999. This may have been due to actions by the Consumer Ombudsman Unit to assimilate the difference in the handling of third-party complaints by insurance companies as damage claims by damaged parties as against claims by insureds that are based on insurance contracts. (See Table 8.4 and Figures 8.4a and 8.4c.)
1999 135 8 56 64
2000 191 6 48 54
Source: Consumer Ombudsman Unit, Capital Market, Insurance, and Savings Division.
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Third-party claim files closed Pct. of justified complaints Pct. of company-uncontested complaints Pct. of complaint files closed as justified or company-uncontested in total complaint files closed
C. Life Insurance (Individual) and Executive Insurance Plans
In life insurance (individual) and executive insurance plans, too, there were more complaints in 2000 than in 1999.
In life insurance (individual), the share of justified and company-uncontested claims in total claims decided rose by 4.4 percent relative to 1999. In executive insurance plans, there was a perceptible 65 percent increase in the number of complaints submitted and a 48 percent upturn in the proportion of complaints that we found justified or that the insurance companies did not contest (both proportions relative to 1999). The increase in the number of complaints and, in particular, in justified and company-uncontested complaints probably traces to an increase in the public’s awareness of the rights of employees who are covered by executive insurance plans and their rights as the insureds of the policy, and to the publication (starting in 1999) of principled decisions on the Web site of the Capital Market Division. (See Table 8.4 and Figures 8.4a–8.4c.) Year Third-party claim files closed Pct. of justified complaints Pct. of company-uncontested complaints Pct. of complaint files closed as justified or company-uncontested in
total complaint files closed
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Life Insurance (Individual):
Executive Insurance Plans:
D.
Health Insurance
In the health-insurance field, more complaints were submitted in regard to long-term care insurance. Most of these complaints concerned rejection of claims on the grounds of “pre-existing medical condition.” Investigation of the complaints showed that it is a matter of insurers’ acceptance of additional insureds in group-insurance arrangements without demanding a health statement from them—and their rejection of specific claims on the grounds of pre-existing medical conditions. We examine these complaints individually, on the basis of the following questions:
1. Was the rejection based on medical information that proves the insurance companies’ allegations?
2. Was the insurance event caused by a pre-existing medical condition?
1999 91 18 49 67
2000 91 12 58 70
Source: Consumer Ombudsman Unit, Capital Market, Insurance, and Savings Division.
Year Third-party claim files closed Pct. of justified complaints Pct. of company-uncontested complaints Pct. of complaint files closed as justified or company-uncontested in
total complaint files closed
1999 24 4 38 42
2000 29 17 45 62
Source: Consumer Ombudsman Unit, Capital Market, Insurance, and Savings Division.
Year Third-party claim files closed Pct. of justified complaints Pct. of company-uncontested complaints Pct. of complaint files closed as justified or company-uncontested in
total complaint files closed
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3. Did the insurance company practice due disclosure before the insured joined the plan andwas the insured aware of the restriction?
On the one hand, insurance companies do not refund the premiums, arguing that they collected the premiums lawfully and the insured should have known about his or her condition and should not have joined the plan. On the other hand, they do not pay proceeds upon the occurrence of the insurance; instead, they turn down the claims on grounds set forth in the policy itself.
Although the number of complaints increased considerably in 2000 (eighty as against forty-five in 1999), the extent of justified complaints cannot be determined yet because the investigation of these complaints entails time-consuming collection of needed documents. Therefore, it is premature to draw definitive conclusions in this matter. For the time being, however, the issue does seem to involve complaints of substance.
Not long ago, a warning to the public was advertised about the loss of insureds’ entitlement to long-term care insurance benefits if at the time the transaction was concluded they had already received a long-term benefit under the National Insurance Law, 1995. We took an especially dim view of a phenomenon in regard to health statements that members of a group health-insurance policy give. When the health-insurance is purchased for the declarer and for the rest of his or her family, the purchaser gives a statement including a clause to the effect that, at the time the form is filled out, he/she knows of no medical examination or finding that was discovered at the time the person joined, in regard to him/herself and family members. According to the insurer, the declarer thereby commits all members of the family to the consequences set forth in the Insurance Contracts Law, 1981, for one who fails to apply due disclosure of material details to an insurer and one who answers in bad faith questions that the insurer asks in the insurance offer. According to the provisions of the law, the insurer is absolved of its undertakings in the policy if it finds that the insured answered the questions in the health statement incompletely or insincerely. The burden of proof belongs to the family member who had not been a party to the statement that the insured gave when filling out the form in his/her name.
E. Motor Insurance—Insurance Benefit in the Event of Total Loss
In 2000, the Consumer Ombudsman Unit emphasized the duty of insurers and insurance agents to practice due disclosure when concluding an insurance transaction.After the Consumer Ombudsman Unit subjected the matter of settling the claims of insureds in total-loss events to system-level treatment, Circular 2000/12 of the Commissioner of Insurance was released. The circular, applying to all policies in effect starting January 1, 2001, requires insurers to give the insured, at the time the insurance contract is concluded, the price schedule on the basis of which a claim pursuant to such an insurance event shall be settled. Rules for
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settling a claim if an insurer violates the provisions of the circular were also set forth. Notably, even before the circular was released, several insurance companies began to provide insureds, at the time that they concluded the insurance contract, with the price schedule that would be used as a basis for calculating vehicle value in the event of total loss and began to ask insureds to disclose, upon signing the contract, various details about the condition of the vehicle.
F. Misrepresentation of Insurance Transaction
Complaints in which it was discovered that an insurer or insurance agent had systematically withheld due disclosure from insureds, e.g., cases in which publications given to insureds included misrepresentation of an insurance plan as a “savings plan,” misinformation about tax benefits to which the purchaser would be entitled, the policy, etc., were treated with severity by the Consumer Ombudsman Unit. In one case, the Unit forwarded a complaint to the Attorney General, in accordance with Paragraph 62(c) of the Insurance Transactions (Control) Law, 1981, on suspicion of a criminal offense. This complaint file has not yet been closed.
G. Relations among Agents, Insureds, and Insurance Companies
In 2000, the Consumer Ombudsman Unit emphasized relations among agents, insureds, and insurance companies. Our stance is that all actions by an insurance agent that are undertaken in a way that seems to have the authorization and empowerment of an insurance company are actions that commit the insurance company, especially if the insurance company has instructed the agent to stop representing it due to its distrust in him/her but did not advise the agent’s clients of this instruction. In these cases, we held the insurance company liable for the consequences of the agent’s actions because the company did not prevent the misrepresentation that the insurance agent had created vis-a-vis his/her clients, even though the company had terminated its relations with him/her. In such cases, an insurance company should take into account the possibility that the agent may represent himself or herself as its agent, collect money from insureds, and pocket the money him/herself, possibly leaving the insureds without coverage and convinced that that an insurance policy was taken out for them.
In two cases in which we suspected a criminal offense or a breach of fidelity vis-a-vis the insured or the insurance company, proceedings to revoke the agent’s license were set in motion and the Commissioner of Insurance presented the findings of the complaint investigation to the advisory committee for discussion in, all of which to take the measures stipulated in Paragraph 29 of the Insurance Transactions (Control) Law, 1981, which mandates such consultation before revocation of license.
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H. Circular Prohibiting Costly Gifts
In 2000, the Unit continued to enforce the provisions of Circular 98/13 of the Commissioner of Insurance, which prohibits the award of costly gifts in the course of an insurance transaction. Consequently, several gift promotions by insurance companies and agents were discontinued.
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3. Principled Opinions
A condensed rendering of principled decisions in various matters, classified by types of insurance and actions taken by the Consumer Ombudsman Unit to prevent recurrence, was presented in the 1999 report of the Commissioner of the Capital Market3.
General Insurance
Principled Decision concerning Method of Disposition of Claim
Background
This decision was made after an insured complained about the way an insurance company and an insurance agency that served as an underwriter (hereinafter, the complainees) processed his claim for damage caused to his vehicle.
Findings
As the claim was being processed, two adjusters’ opinions were given and the insurance company chose not to rely on the first opinion, which was given orally. The insured was not provided with a copy of the first opinion. In the course of investigation of the claim, the insurance company moved the damaged vehicle from place to place and finally—more than a month after the insurance event—delivered it for repairs to a garage that was far from the vehicle owner’s place of residence.
Decision
As it processed this complaint, the Unit made decisions in several matters related to the way the complainees handled the claim. Below are the details of the decisions in main issues that were taken up pursuant to this complaint:
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1. Failure to present the insured with an adjuster’s report: The decision was that, as arule, it is the complainees’ duty to respond to the complainant shortly after the complaint is presented and to provide him/her with the adjuster’s report, in its initial and final versions, if the insured so requests. The complainees must inform the insured that they do not intend to base themselves on the adjuster’s first report, and if such a report exists in writing and they are not interested in providing it to the insured, they must inform the insured that they intend to seek an additional adjuster’s opinion, which they will forward to him/her.
2. The delay in beginning the repairs: The complainees were found to have committed a delay that had no satisfactory explanation. Therefore, the complaint in this respect was found justified.
3. The insurance company’s reliance on the report of an adjuster who acts on its behalf: It was decided that an insurance company may obtain a second opinion from another adjuster before authorizing the repairs and need not present the first opinion if it has chosen not to base itself thereon. However, an insurance company may act in this fashion only if:
a. it informs the insured that it intends to consider another opinion of another adjuster who acts on its behalf;
b. the additional opinion furnished to the insurance company complies with the rules of ethics that apply to an adjuster by law, and the insurance company carries out full due disclosure vis-a-vis the insured by means of the adjuster’s opinion;
c. the insurance company acts in good faith and with alacrity, and the additional opinion does not delay the payment of insurance proceeds under the provisions of the law and the policy.
4. Sending the vehicle to a garage far from the insured’s place of residence for repairs: It is doubtful that forcing the complainant to commute from his place of residence to the location of the garage in order to monitor the repairs of his motor vehicle, which were time-consuming, is consistent with the duty of good faith in honoring the complainees’ contractual undertaking in Paragraph 39 of the Contracts Law. Therefore, the complaint in this respect is found justified.
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Motor Insurance
Returning Documents of Third-Party Claim
Background
The Consumer Ombudsman Unit received many inquiries from insureds who brought claims against insurers of third parties who had damaged their vehicle, on the grounds that as the claims being investigated the insurers returned to them or their insurance agents the claim material every time that the insurers found a need for additional documents to complete the file. This happened more than once in the course of the investigation of the claim or when the insurer received no notice from its insured about the occurrence of the insurance event.
Legal Background
When a third party (hereinafter, the claimant) presents a claim against an insurer of a party who damaged the claimant’s vehicle (hereinafter, the insurer), the insurer is entitled to receive all documents that it needs to determine its liability. If it lacks documents of any kind, it is entitled to return the claim material to the claimant or to his/her insurance agent in order to complete the documentation.
Decision
(a) As aforesaid, the insurer may return claim material to the claimant or to his or her insurance agent in order to make up missing documentation. However, an insurer that investigates and processes a claim in good faith must examine the material that it has received and send it back for further documentation only once, with an accompanying letter in which the notes spell out exactly which documents it needs to complete the documentation. The insurer may not return the claim material repeatedly on the grounds that extra documentation is needed.
(b) Once an insurer receives notice from its insured about an insurance event, it should keep the claimant’s claim material in its possession, deal with it when it receives notice from its insured and, concurrently, send the claimant an letter explaining his or her rights.
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Relations between Agent and Insured
Insurance Agent’s Duty to Transfer Funds to Insured Immediately
Background
The court asked the Office of the Commissioner of Insurance to explain its stance on the question of when an insurance agent should forward money overpaid by the insured and refunded by the insurance company by means of the agent.
Legal Background
Neither the law nor any circular of the Commissioner of Insurance states when the forwarding of money from an insurance agent to an insured should take place. Accordingly, the provisions of Paragraph 11 of the Interpretation Law, 1981, apply. These provisions state that the date for performing a requirement for which no date of performance is stipulated is “with due alacrity under the circumstances at hand.”
Decision
In view of the foregoing, an insurance agent must forward money received from an insurance company to the insured with due alacrity under the circumstances at hand, especially considering the special relationship of trust that exists between an insurance agent and an insured.
Health Insurance
Holders of Long-Term Care Insurance who Receive a Long-Term
Benefit from National Insurance.
Background
Several persons insured under long-term care policies complained to the Ombudsman Unit about rejection of their claim for insurance benefits on the grounds that they had received long-term benefits from National Insurance before they joined the insurance plan. In several complaints it was claimed that the insured had functioned independently at the time he joined the insurance company’s long-term plan and that the National Insurance benefit was meant only to help pay for a golden-age club, for social purposes only, or to obtain assistance in household chores. It
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was also claimed that eligibility for the National Insurance long-term care benefit was determined on the occasion of an event suffered by the insured (e.g., a traffic accident) that limited his functioning for a certain period of time, and that by the time he joined the insurance company’s long-term insurance plan he had recovered and was totally independent.
Legal Background
An insured who meets the terms of the National Insurance Law that entitle him or her to a National Insurance long-term care benefit, even before he or she subscribes to the insurance company’s long-term care coverage, comes under the exception in the insurance policy that absolves the insurance company of paying him or her insurance benefits on account of inability to carry out one of the Activities of Daily Living set forth in the policy.
Decision
Generally speaking, the Consumer Ombudsman Unit believed it correct to reject these complaints. However, in complaints where the question was whether the insured functioned independently at the time he or she joined the long-term care plan, this was found to be a question of fact and the Consumer Ombudsman Unit had no grounds for any decision. Importantly, the Consumer Ombudsman Unit looks askance at any situation in which an insured receives a benefit from a given party, such as National Insurance, on the basis of a given state of health and subsequently argues differently in order to establish eligibility for a benefit from some other party, such as an insurance company.
Provident and Pension Funds
1.
Transfer of Surplus Severance-Pay Funds to Employer by
Provident Fund under Compromise Agreement between Employee
and Employer
Background
In the course of a member’s work, money for benefits and for severance pay was deposited on his behalf with a provident fund. When the member left his last place of work, he signed a proposal for a compromise agreement with his last employer concerning the level of severance pay that he would receive. However, after the member received this sum, the employer withdrew the surplus severance-pay money that remained with the fund. The complainant alleged that the provident fund had no right to transfer this balance to the last employer since,
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according to the fund’s statutes, the total severance-pay money may be withdrawn only if themember leaves the fund, and a proposal for a compromise agreement with the employer for the receipt of severance pay does not suffice, even if signed by the employee, if the member has not left the fund. In any case, the member argued that there were no grounds for allowing the last employer to withdraw the surplus money, i.e., that in excess of the sum in the proposed compromise agreement, since this money had been deposited by previous employers.
Legal Background
Paragraph 29(b)(2) of the provident fund’s statutes states that “[If] it is proved to the satisfaction of the company that the employee is not entitled to demand severance pay from the employer, or is not entitled to the entire sum that has accrued in his/her account, the company shall make available … the sum exceeding to that which [the employee] is entitled to the employer ….” Accordingly, the legal question is whether the compromise agreement proposal honors the stipulations in Paragraph 29(b)(2) of the provident fund’s statutes in a way that allows the provident fund to make the excess money available to the employer.
Decision
After the provident fund advised that no severance-pay money had been contributed by previous employers, there was no reason for us to address ourselves to the complaint in this respect. As for withdrawal of the excess money by the last employer, the Consumer Ombudsman Unit ruled that the employee’s entitlement to severance pay is related to the question of whether the employer-employee relationship between the employer and the complainant ended at the time the compromise agreement proposal was signed. Under the circumstances of the complaint, it turned out that the employee had signed the compromise agreement proposal and, therefore, payment of severance pay on its basis should be considered the full exercise of the employee’s entitlement to severance pay from the employer. Nevertheless, since the question of severance pay belongs to the domain of employer-employee relations, and since as such it comes under the exclusive purview of Labor Court, the complainant was informed that if he obtains a final ruling from Labor Court that even though he had received severance pay on the basis of the aforementioned compromise proposal, he is entitled to an additional severance-pay sum from his employer in such a way that said proposal does not meet the requirements of Paragraph 29(b)(2) of the provident fund’s statutes, he may resubmit his complaint.
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2.
One-Sided Conditions in Pension Fund Statutes and Concern about
Conflict of Interests
Background
The statutes of an establishment-level pension fund contained clauses that were alleged to be one-sided conditions. Suspected conflict of interests was also alleged, since the fund, as the members’ fiduciary, should not be allowed to use members’ contributions to purchase assets for the establishment. It was also argued that the establishment must make up an actuarial deficit that the pension fund had amassed over the years and that there was a suspected conflict of interests in regard to the pension fund’s accountant. Finally, the complainant argued that the pension fund should be required to take out insurance for its members.
Legal Background
In Civil Appeal 1795/93, Egged Members’ Pension Fund v. Yosef Yaakov, 51(5)433, the court found that the statutes of a pension fund are tantamount to a standard contract and that, accordingly, the court is entitled to find that members who joined after the statutes were completed may claim that their provisions amount to one-sided conditions.
Furthermore, Regulation 41e of the Income Tax Regulations (Rules for Authorization and Management of Provident Funds), 1964, stipulates that a provident fund shall act for the welfare of its members only and shall behave with the trust, diligence, and caution that a cautious fiduciary would apply under the same circumstances.
Decision
Pursuant to our inquiry, the pension fund stated that it is taking action to amend the provision in its statutes that, the complainant alleges, amounts to a one-sided condition. As for the complainant’s demand that the establishment make up the actuarial deficit, it transpired from the establishment’s response that the establishment had undertaken not to do this but rather to make up a shortfall in the “retirement reserve” account. We looked into the allegations about suspected conflict of interest but, basing ourselves on a clause in the agreement between the pension fund and the establishment, found it to be groundless. We also found no grounds for the allegation that the establishment had used pension money in contravention of the pension fund’s duty as the members’ fiduciary. As for the claims about the fund’s duty to insure its members, we informed the complainant that although the fund’s Articles of Association, under the section on “Goals,” empower the fund to take out reinsurance, the fund is not required to exercise its full powers on the basis of said goals.
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4. Statistical Survey—Consumer Complaints concerning Insurance,
Pension Funds, Provident Funds, and Savings in 1998–2000
Thiscpart of the chapter presents a statistical survey of consumer complaints concerning insurance, pension funds, provident funds, and savings, that were submitted to the Commissioner of Insurance in 1998–2000.
The following statistics show that the number of complaints uncontested by insurance companies is continuing to rise. There was a 20 percent increase in such complaints in 2000, and consequently the number of complaints that we found justified decreased.
The number of complaints classified as irresolvable also rose in 2000. To explain the upturn in complaints in this category, we should note that it includes handling of general principled questions from consumers that do not concern a specific “victim,” as well as requests for an opinion about the legality of actions taken by an insurance agent or an insurer under the terms of a policy or a law that the public at large has difficulty in accessing or understanding. One of the unique characteristics of the insurance industry is payment in advance, by the insured, for an insurance product that may be needed in the future within a given probability. The insured buys an insurance product to be secure in the case of an insurance event, but at the time the transaction is concluded the insured has no way of evaluating the quality of the product that he/she has purchased and of the service that will be delivered in performance of the contract. To enhance competition in the quality of service, it is the practice of insurance commissioners around the world to publish statistics on consumer complaints that they have processed, including a ranking of insurance companies on the basis of various complaint indices. They do this to give the public a yardstick for the evaluation of products and services on the basis of the experience of others who needed to invoke their insurance policies. This practice is conspicuous in the United States, where insurance commissioners advertise the rankings for the public at large. Indeed, these publications (or abstracts thereof) may be viewed on the Web sites of insurance commissions in the various U.S. states.
In this report, Israel’s insurance companies were ranked on the basis of complaints that were found to be justified and those that were uncontested by insurance companies in motor insurance — comprehensive and third-party — only. We believed it correct to continue ranking the companies in terms of the level of justified complaints against each company, and in terms of complaints that they did not contest, for two reasons: (1) to prompt each company in the rankings to be careful in examining claims from insureds and to resolve them appropriately, and (2) to allow insureds who prepare to conclude an insurance transaction to consider the insurance company’s ranking in the table, if he/she considers this proper.
Table 8–1
Complaints Received (Insurance)
Multiannual Comparison, 1990–2000 1990 556 — — 1991 684 23.0 23.0 1992 464 -32.2 -9.2 1993 1,386 198.7 189.5 1994 1,405 1.4 190.9 1995 1,381 -1.7 189.2 1996 2,004 45.1 234.3 1997 2,170 8.3 242.6 1998 2,193 1.1 243.7 1999 2,485 13.3 257.0 2000 3,014 21.3 278.3
Source: Consumer Ombudsman Unit, Capital Market, Insurance, and Savings Division
A. Long-Term Trends in Level of Complaints
1.
Long-term Trends in Number of Complaints about Insurance
Year
Complaints
received
Year-on-year
percent
change in
complaints
received
Cumulative
percent
change in
complaints
received
20
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2.
Long-term Trends in Number of Complaints about Provident Funds, Pension
Funds, and Savings Plans
Table 8.2
Complaints Received (Pension Funds, Provident Funds, and Savings),
1998–2000
1998 257
1999 206
2000 201
Source: Consumer Ombudsman Unit, Capital Market, Insurance, and Savings Division
Year
Complaints
B. Categories of Decisions on Complaints
1.
Distribution of Complaints in Insurance
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Table 8.3
Rulings on Complaints concerning Insurance, 1998–2000
(N and percent, by decision categories)
Decision categories
1998
1999
2000
No.
Percent
No.
Percent No.
Percent
Total complaint files
opened in year
2,193
100
2,485
100
3,014
100
Total complaint files
closed in year
1,827
100
2,027
100
2,624
100
Decisions in complaint files closed:
Complaints irresolvable,
of all complaint files closed 1,088 60 1,017 50 1,562 60
Complaints outside
Commissioner’s purview 39 2 95 5 87 3
Complaints resolved, of all
complaint files closed 700 38 915 45 975 37 Thereof:
Complaints not contested
by company 268 38 411 45 495 51
Justified complaints 99 14 92 10 72 7
Unjustified complaints 333 48 412 45 408 42
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T
able
8.4
Rulings
on
Complaints
concerning
Insurance,
Selected
Lines,
1999–2000
Distribution
V
ehicle
(pr
operty)
V
ehicle
(3rd
party)
Life
(individual)
Executive
1999
2000
1999
2000
1999
2000
1999
2000
N
Pct.
N
Pct.
N
Pct.
N
Pct.
N
Pct.
N
Pct.
N
Pct.
N
Pct.
Complaint files opened 736 100 757 100 314 100 427 100 280 100 369 100 84 100 139 100 Complaint files closed 605 100 635 100 239 100 364 100 241 100 324 100 80 100 11 1 100 Distribution of closed files: Complaints unresolved 314 52 354 56 104 44 170 47 137 57 223 69 52 65 79 71 Complaints outside Commissioner ’s purview 9 1 7 1 0 0 3 1 13 5 1 0 3 4 5 3 3 Complaints resolved among complaint files closed: 282 46 274 43 135 57 191 52 91 38 91 28 24 30 29 26 Thereof: Complaints unconteseted by company 11 1 39 145 53 75 56 92 48 45 49 53 58 9 3 8 1 3 4 5 Complaints found justified 20 7 2 0 7 11 8 11 6 16 18 11 12 1 4 5 1 7 Complaints found unjustified 151 54 109 40 49 36 88 46 30 33 27 30 14 58 11 38 Sour ce: Consumer Ombudsman Unit, Capital Market, Insurance, and Savings Division26
2. Distribution of Complaints concerning Provident Funds, Pension
Funds, and Savings Plans
Table 8.5
Rulings on Complaints concerning Pensions, Provident Funds, and Savings,
1999–2000
(N and percent, by complaint categories)
Decision categories
1999
2000
No.
Percent
No.
Percent
Total complaint files opened in year
206
100
201
100
Total complaint files closed in year
250
100
204
100
Complaints irresolvable, out of
complaint files closed 101 40 94 46
Complaints outside Commissioner’s
purview 15 6 13 6
Complaints resolved 134 54 97 48
Thereof:
Justified complaints 40 30 34 35
Complaints uncontested by company 0 0 1 1
Unjustified complaints 94 70 62 64
28
5. Rankings of Automobile Insurance Companies (Property)—
Comprehensive and Third-Party — by the Consumer Complaint Index
In our report for 1999, we published our first ranking of insurance companies in the motor insurance line—comprehensive and third-party insurance—on the basis of an index of justified complaints. The ranking included every insurance company that accounted for at least 1 percent of premiums in this type of insurance.
This year, we add complaints that were resolved as “uncontested” to those that were found justified. The main reason for this was the relatively small number of complaints found justified as against those “uncontested,” as shown below:
Comprehensive insurance
Third-party insurance
Complaints found justified 11 10
Complaints uncontested 95 91
Total 103 101
The ranking was performed in two phases. First, each company’s ratio of justified and uncontested complaints to gross insurance premiums collected (the “company ratio”) was worked out. Then, accordingly, we worked out the “industry ratio,” i.e., the total of justified and uncontested complaints relative to total gross insurance premiums collected by all companies included in the ranking.
In the second phase, we standardized the ratio obtained in the first phase as against the industry ratio by dividing the company ratio by the industry ratio.
The more a company’s number after standardization is smaller than 1, the better its ranking is. The larger the number obtained is than 1, the less auspicious its ranking.
To make the tables easier to read, a boldface line appears in each table, dividing the data on the companies in accordance with the ranking. Companies that have rankings smaller than 1 are over this line; those with rankings greater than 1 are under it.
29
In all the tables, the companies appear on the basis of the ranking results in rising order.
Several companies merged with others in the course of 2000. The data in our possession for 2000 are for companies after these mergers.4 For this reason, we do not present the ranking in comparison with the previous year.
Although we thought it best to draw up the rankings on the basis of absolute numbers of policies and claims, we could not do this due to the absence of available and reliable information about these indicators. Therefore, we had to perform the rankings in the manner shown.
Importantly, since there is an element of relatively in the rankings, the relative effect of a small number of complaints is greater at small companies (such as Ilit, Aryeh, Hamagen, and the direct insurers) than the same number of complaints against larger companies (such as Clal, Sahar, Menorah, and Phoenix). This is especially evident when the absolute number of complaints against companies is equal but the rankings are different.
Since we lack the tools to weight the complaints in terms of their severity, all complaints are treated as equally severe. It is entirely possible that even if a company earns a favorable ranking, i.e., a result smaller than 1, the complaints against the company may include some very severe ones—or vice versa.
Thus, ranking should not be the only factor one should take into account when choosing an insurance company. The premium sought should also be an important factor in the decision, for example. So should efficiency of service to the insured, level of coverage, expansion of coverage, and recommendations from relatives and friends.
30
Table 8.6a
Ranking of Insurance Companies by Justified and Company-Uncontested
Complaints in Motor-Vehicle (Property–Comprehensive) Insurance Relative to
Premiums, 2000
Company
Complaints (N)
Rank
AIG 8 3.98 Personal Direct 5 2.87 IDI 9 2.13 Zion 9 1.33 Hamagen 4 1.26 Sahar 11 1.22 ILDC 6 1.18 Aryeh 6 1.17 Ilit 5 1.14 Average 1.00 Hadar 9 0.90 Clal 31 0.84 Menorah 5 0.83 Eliahu 5 0.74 Migdal 5 0.32 Phoenix 2 0.31 Ayalon 1 0.13 Agricultural Insurance 0 0.00 Shomera 0 0.00 Shirbit 0 0.00 Total 103
Sources: insuran`ce companies and Consumer Ombudsman Unit, Capital Market, Insurance, and Savings Division
31
Table 8.6b
Ranking of Insurance Companies by Justified and Company-Resolved
Complaints in Motor-Vehicle (Property–Third-Party) Insurance Relative to
Motor-Vehicle Insurance Premiums, 2000
Company
Complaints (N)
Rank
A.I.G 8 50.4 IDI 01 24.2 Menorah 41 63.2 HADAR 61 36.1 Aryeh 8 95.1 Migdal 9 25.1 Hmagen 4 82.1 Personal Direct 2 71.1 Average 00.1 Clal 51 89.0 Phoenix 4 46.0 Ilit 2 74.0 Eliahu 3 54.0 Sahar 3 43.0 ILDC 1 02.0 Zion 1 51.0 Ayalon 1 31.0 Agricultural Insurance 0 00.0
Shomera
0
00.0
Shirbit
0
00.0
Total
101
Sources: insurance companies and Consumer Ombudsman Unit, Capital Market, Insurance, and Savings Division
(1) Including Maoz and Sela, which merged into Shimshon in 1999. In 1998, Shimshon was not active in
APPENDICES
CONSUMER
33
Appendix 8.1
Paragraphs 60–62 of the Regulation of Insurance Transactions
(Control) Law, 5741–1981
Paragraphs 60–62 of the Regulation of Insurance Transactions Control)
Law, 5741–1981
60. Investigation of Consumer Complaints
a. The Commissioner [of Insurance] shall investigate consumer complaints that he/she considers material in respect to an action taken by an insurer or an insurance agent in insurance affairs.
b. The Commissioner shall not investigate a complaint in regard to which litigation in court or before an arbitrator has begin, or that has been resolved by a court or an arbitrator, unless special reasons that shall be recorded are present. However, the Commissioner may investigate a complaint in a matter in which a court or an arbitrator has been presented with a claim but has not yet begun to litigate it.
61. Methods of Investigation
a. Complaints shall be investigated in such ways as the Commissioner deems fit and the Commissioner shall not be bound to the provisions of jurisprudence or evidentiary law.
b. The Commissioner shall advise the complainee of the complaint and shall give him/her a suitable opportunity to respond thereto.
62. Results of the Investigation
a. If the Commissioner finds that the complaint is justified, he/she shall serve the complainant and the complainee with notice to this effect; the Commissioner may spell out the crux of his/her findings in his/her response and may instruct the complainee to correct a deficiency that the investigation brought to light, be it in the case at issue in the complaint or in general, in the manner and at the time that he/she instructs.
b. If the Commissioner finds that the complaint is unjustified or undeserving of investigation, he/she shall advise the complainant and the complainee to this effect and may spell out the crux of his/her findings in his/her response.
c. If the investigation results in suspicion of a criminal offense, the Commissioner shall advise the Attorney General to this effect.
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Appendix 8.2
Categories of Decisions in Consumer Complaints
a.
Complaints Outside the Purview of the Commissioner of Insurance
These complaints are sent on to the competent authority. For example, complaints against finance companies regarding the terms of a contract concluded between the company and the creditor (a leasing transaction) are forwarded to the Ministry of Industry and Trade or the Ministry of Justice. Complaints about a motor-vehicle adjuster’s professional work are sent on to the Ministry of Transport. Complaints against banks are referred to the Bank of Israel.
b.
Irresolvable Complaints
a. Complaints that evoke questions of principle and questions that do not require contact with an insurer because they concern general issues that are dealt with in the law, in regulations, in circulars of the Commissioner of Insurance, or in previous principled decisions on the same topic.
b. Complaints that are found to be groundless.
c. Complaints in which the complainant’s version cannot be preferred over that of the complainee due to insufficient evidence (usually in documents). In these cases, complainants are advised to turn to a competent court of law.
d. Complaints that are being litigated (or arbitrated) between the complainant and the complainee and there is no special reason under Paragraphs 60 –62 of the Control Law to intervene in these proceedings.
e. Complaints submitted after legal proceedings (including arbitration) between the complainant and the complainee on the topic of the complaint have been completed.
Complaints that the Commissioner of Insurance deems to be resolvable are sorted into three groups:
a. justified complaints;
b. company-uncontested complaints; c. unjustified complaints.
35
c.
Company-Uncontested Complaint
The “Company-Uncontested Complaint” category was introduced at the beginning of 1998, when a new system for processing of consumer complaints was activated. This category includes complaints in which the complainee, after receiving and examining the complaint, undertook to do what the complaint had asked him/her to do, and in which the Commissioner of Insurance made no decision and ways to correct the deficiency were determined.
This category is meant to encourage insurance companies, in particular, to act on their own to correct defects that come to light in complaints and not to wait for the Commissioner of Insurance to hand down a decision.
One of the most important achievements of the Consumer Ombudsman Unit is a serious revision in the attitude of life-insurance companies toward complaints against them and toward complainants. Today, insurance companies are trying to investigate complaints by themselves and deliver a rapid and, from the complainant’s point of view, satisfactory response. The appointment of consumer-complaint officers by insurance companies has done much to expedite the investigation of complaints, since it has stipulated one official at the company who acts in the company’s name vis-à-vis consumer complaints, forwards complaints to the various departments of the company or to the insurance agency, and coordinates all processing of the complaint. Thus, the complainant and the Consumer Ombudsman Unit of the Ministry of Finance interrelate with one official at the company, with whom they maintain unbroken communication as long as the complaint is being processed.
In many complaints that are categorized as “company-uncontested,” the company presumably responded to the complainant’s inquiry after the complaint was sent to the Commissioner of Insurance and thence to the company for its response. When complaints concern matters about which the Consumer Ombudsman Unit has already handed down a “principled decision,” the insurance company’s response is often part of the process of assimilating such decisions into its working processes.
In many cases, after the insurance company delivers its response, the Consumer Ombudsman Unit holds discussions with representatives of the companies, legal advisors, and the companies’ consumer inquiry officers, after which the companies agree to accede to the insured’s request even in the absence of findings. Such complaints are also classified as “company-uncontested.”
36
Appendix 8.3
How to File a Complaint
The complaint must be presented in writing and submitted to the following address: Commissioner of Insurance
Consumer Ombudsman Unit
Capital Market, Insurance, and Savings Division Ministry of Finance
1 Kaplan Street, POB 13195 91131 Jerusalem, Israel
The complaint may also be submitted by facsimile: 9722-652-1857
Inquiries about filing a complaint may be made and progress in investigating a complaint may be monitored by phoning 9722-531-7232 (multi-line system) on Sunday–Thursday, 10:00–12:00. If the telephone lines are overloaded during these hours, callers may receive a recorded message and should call back.
A complaint presented to the Commissioner of Insurance should include the following details, among others:
1. Name and address of complainant, mailing address, telephone number, and, if relevant, facsimile number.
2. Name of complainee—insurance company, insurance agent (in the case of an insurance agent, present his/her full address and, if known, telephone number).
3. Description, as concise as possible, of the topic of the complaint. 4. Number of the relevant policy.
5. Photocopies of relevant documents on which the complainant bases his/her allegations. Specimens of various types of complaint forms follow.
The Commissioner of Insurance does not handle anonymous complaints.
Electronic mail may be used to present general inquiries, including those concerning complaints being processed; how to submit a complaint; and questions of principle.
Electronic mail may not be used to file complaints. The e-mail address is
37
Appendix 8.4
Form for Complaint concerning Insurance
Name of complainant: ________________________ Address of complainant:________________________
Telephone: Home ____________ Work ____________ Mobile ____________ Facsimile: Home ____________ Work ____________
Details of the complaint (may be submitted in a separate document): _________________________________________
_________________________________________ _________________________________________ _________________________________________
Complainee (name of insurance company, name of insurance agent): _________________________________________
_________________________________________
Type of insurance (motor vehicle, homeowner’s, life) ____________ Policy number: ________________________
License-plate number (if the complaint concerns a motor vehicle): ________________________
Date of insurance event: ________________________
If a third party is involved:
First name and surname: ________________________ Name of insurance company: ________________________ Number of third party’s policy: ________________________
Appendix 8.5
Form for Complaint concerning Pensions, Provident Funds,
and Savings
Appendix 8.5Name of complainant: ________________________ Address of complainant: ________________________
Telephone: Home ____________ Work ____________ Mobile ____________ Facsimile: Home ____________ Work ____________
Details of the complaint (may be submitted in a separate document): _________________________________________
_________________________________________ _________________________________________ _________________________________________
Complainee (name of provident fund, pension fund, or savings plan provider): _________________________________________
_________________________________________
Membership number (for provident or pension fund): ____________ Bank account number (for savings plan): ____________
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Appendix 8.5
Insurance Companies’ Consumer Inquiry Officers
(Updated as of November 18, 2001)
Company Name Telephone Fax Address
Avner Arnon Porat 03-5677286 03-5606294 39 Rothschild Ave., 61318, Tel Aviv
IDI Direct
Insurance Tami Shoshani 03-5654080 03-5627257 1 Carlebach St., 67132 Tel Aviv
Complaints about
Personal Direct Eli Howven 03-5650934
A.I.G. Tzafrir Carmi 03-9272308 03-9272424 25 Hasibim St., Kiryat
Matalon, 49517 Petah Tikva
Ayalon Noga Rahmani 03-5381010 03-5373883 32 Begin Hwy., 66182
Tel Aviv
Eliahu Yaakov Darazi 03-6920045 03-6956995 2 Ibn Gavirol St.,
64077 Tel Aviv
Aryeh Yosefa 03-5141716 03-5100494 9 Ahad Ha’am St.,
Peri-Vardi 65164 Tel Aviv
Dikla Rikki Rodnik 03-7549451 03-7549400 3 Abba Hillel Silver
St., POB 1951, 52118 Ramat Gan
Hadar, Dolev, Yifat Uzalbo 03-7332002/3 03-5710276 Derekh Hashalom 53,
Noga Givatayim
ILDC Natan Haimov 03–7962634 03-5167792 2 Aryeh Shenker,
68010 Tel Aviv
Israeli Phoenix Arie Arieli 03-7141286 03-5604008 30 Levontin St., 65116 Tel Aviv
Clal Sima Yair 03-6387725 03-6397090 48 Begin Hwy., 66184
Tel Aviv
Migdal, Sela, Tsippi 03-5637955 03-5612761 26 Sa’adia Gaon St.,
Hamagen, Maoz Neumann 67135 Tel Aviv
Shimshon,
Menorah, Yaakov 03-7107432 03-7107788 115 Allenby St.,
Sahar-Zion Ilana Sagis 03-7547823 03-7547800 3 Abba Hillel Silver St., POB 1954, 52118 Ramat Gan
Ilit Yosefa 03-5141716 03-5111494 9 Ahad ha-Am St.,
Peri-Vardi 65164 Tel Aviv
Inbal Dror Amitai 03-7533888 03-7533887 33 Bezalel St., 62521
Ramat Gan
Shomera Mordechai 03-9251111 03-9214588 13 Hasibim St., POB
Ben-Shahar 2762, 49127
Petah Tikva
Shiloah Ilana Sagis 03-7547800 03-7547800 3 Abba Hillel Silver
St., POB 1954, 52118 Ramat Gan
Shirbit Yoel Hertzel 09-8922252 09-8902248 POB 8426, Nordau
New Industrial Zone, 42505 Netanya
Bureau of Dr. Moshe 03-6396322 03-6396322 18 Insurance Agents
Hamasger Ben-Eliezer St., POB 57696, 61574
Tel Aviv
