Insurance companies looking for more ways to refuse payouts?
Consumers take out insurance policies to minimise risk and protect against the unexpected. Over a person’s lifetime thousands of pounds is likely to be paid into an insurance plan, with the hope that in time of crisis there is something that can cover the financial demands.
Published 5 June 2013:
But in more cases than ever, companies are refusing to pay out and it can feel like the company you’ve paid to give you a sense of security is actually working against you.
Richard Moss and his girlfriend claimed on their Tesco Bank contents policy following a burglary at their home in April last year.
£4,000 worth of their belongings had been stolen.
When he put in the claim, he explains that he found the questions asked by the loss adjustors very searching. Richard said, 'they were quite aggressive with my girlfriend and quite searching, it was more an interrogation than a fact finding mission really.'
According to WHICH? policyholders often contact them complaining of harassment from insurance companies after making a claim – saying they are made to feel like criminals.
Which was how Richard was also left to feel. Months after the burglary he received a letter from Tesco Bank, asking him to explain a message he had put on twitter days after the burglary.
Richard had tweeted about music he was listening to on his iPod. Restricted to 140 characters, he didn’t go into detail and describe that the iPod feature he was referring to was actually part of his iPhone – a device he had not reported to them as stolen.
However, because he had reported his iPod as stolen, the insurer refused to pay out on this item – the value of which was £179.99.
In the last year the Financial Ombudsman Service has seen a 20% rise in complaints about rejected insurance claims.
The Director of Communication and Customer Insight of the Financial Ombudsman Service (FOS), David Cresswell explains, in an increasing number of cases that are referred to the FOS, insurance companies are not following the well-established guidelines. He adds, 'in the disputes we’re upholding in favour of the consumers we’re increasingly seeing insurance companies who’ve made decisions on claims that were not only tough but actually unfair.'
Nic Hughes’ family were put in that position.
Nic was diagnosed with gall bladder cancer in spring 2012.
When the family made a claim on his critical illness policy with Friends Life insurers, it was refused.
Friends Life informed the family that the claim had been declined because Nic had not declared a previously existing condition or symptom – pins and needles.
Nic had suffered from a condition called Ulcerative Colitis (UC) for a number of years, and pins and needles can be one of many of the symptoms.
Nic had fully disclosed details of his UC when he took out the insurance policy, so he was shocked when the company cancelled his policy. As he had told them, his pins and needles were entirely unrelated to gall bladder cancer.
In October 2012 Nic Hughes passed away.
But, determined that they were in the right, his widow Susie continued to fight the case.
In April 2013, the Adjudicator at the FOS recommended that Friends Life pay out.
The company abided by the decision, and paid the family £100,000 plus interest.
Nic’s widow Susie felt there was no compassion from the company and that the dispute affected her last few months with her husband. But she said 'what makes me smile now is that we didn't let them drive over us. We were not going to let them do that. And you know, we fought all the way. And we got the outcome we deserved.'
A SPOKESPERSON FOR FRIENDS LIFE SAYS:
Any claim on a critical illness policy is clearly undertaken at a distressing time for the family involved. When contacted to dispute our decision to cancel the policy based on non-disclosure, Friends Life urged the family to refer their case to the Financial Ombudsman Service (FOS). The FOS is the recognised independent industry forum for disputes of this nature and involves a complaint procedure that is straightforward and free of charge for the consumer. Due to the process laid down by the FOS we were unable to submit the complaint ourselves, as it had to come from the family.
Throughout the process we listened to and understood the sentiment around what were very difficult circumstances. Whilst acknowledging the social media campaign that took place, Friends Life maintains that the resolution of cases such as this are a private matter for the family involved and are best brought to resolution through the FOS.
In this case we committed to abide by the FOS’s decision and, while we continued to have concerns about some of the details of the case relating to the non-disclosure of particular symptoms, we were sympathetic to the circumstances of Mr Hughes’ family and believed it would be unfair to prolong the claim process any further. Therefore, rather than refer this case to a senior Ombudsman for review, we promptly made a payment to the family for the full value of the claim, plus interest. This was in addition to an ex-gratia payment already made during the FOS referral process to help the family.
Friends Life paid out £122m in Critical Illness Claims in 2012, compared to £89m in 2011. When considering an application for critical illness cover we need to have full disclosure of all conditions and their symptoms so that we can properly assess the case. Friends Life follows the Association of British Insurers (ABI) Code on Non-disclosure and Treating Customers Fairly. In line with the Consumer Insurance Act, which came into force in April, providers need to ask all relevant questions at the point of sale and customer claims cannot be declined on the basis of non-disclosure unless information is deliberately or carelessly withheld or misleading. In this case specific questions were not answered accurately, which was the basis for the initial cancellation of the policy.
A SPOKESWOMAN FOR TESCO BANK SAYS:
It is always our aim to process all claims quickly and fairly, and to keep customers informed from start to finish. We do have checks we need to make to validate claims, which means we can offer good premiums for all our customers.
In this case, as often happens with theft claims, we needed to wait for a police report on the burglary. As soon as the police investigation concluded the report was received and we paid out £3,026.75 to the customer in February 2013.