The number of consumer complaints about the life and health insurance industry has surged to the highest level ever, the OmbudService for Life & Health Insurance (OLHI) has reported.
In OLHI's 2017 annual report, released on Tuesday, the organization reported that it received 2,632 complaints in the fiscal year ended March 31. That is up by 23.2% from last year's total of 2,136 and up by 6.8% from the number of complaints in fiscal 2014-15.
More than half of the complaints received involved denied claims, at 57.5%; whereas 17.4% of complaints were related to service, 13.9% were related to products, 6.3% involved marketing and sales and 4.9% involved underwriting.
Disability insurance was the product with the highest volume of complaints, comprising 34.8% of total complaints; followed by life insurance, which comprised 30.7% of complaints. Complaints about employee health and dental coverage comprised 18.4% of total complaints, and 6.7% of complaints involved travel insurance.
There were some notable changes in the volume of complaints coming from each region of the country, OLHI reports. In particular, the number of complaints in Quebec soared to 1,343 from 986 last year — an increase of 36.2%. Quebec consumers now represent more than half (51%) of all complaints across the country.
The volume of complaints also grew in the Prairie provinces to 270, up by 25.6% over last year, and in British Columbia, where complaints were up by 24.4% to 168.
OLHI opened 26 new investigations and closed 25 investigations during the 2016-17 fiscal year. Of the closed cases, 28% were settled in favour of the consumer. That's a sharp drop from last year, when 80% of OLHI's investigations were settled in favour of the consumer.
OLHI notes in its annual report that it's pursuing changes to the way that complaints about independent agents are handled. Specifically, the organization has been in discussions with the Canadian Council of Insurance Regulators (CCIR) regarding this issue. OLHI says the CCIR has determined that complaints involving independent insurance advisors should be handled through advisors' errors and omissions (E&O) insurance rather than through OLHI.
"The CCIR determined that E&O insurance is a viable option as a dispute-resolution process and recommended that OLHI work with industry to ensure complaints of this nature are transferred to E&O insurers," says Andrea Zviedris, communications manager at OLHI, in a statement emailed to Investment Executive.
When OLHI receives complaints from consumers about their independent agents, the organization now encourages them to ask their agent to submit a claim against their E&O insurance.
Photo copyright: garagestock/123RF