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Claim decline overturned but policy still cancelled
OshayAway
Posts: 715 Forumite
I wonder if any insurance bods could help with an unusual case I have been dealing with on behalf of a client.
Long story short, a personal possessions claim was declined recently and the policy cancelled by the insurer shortly after renewal. The claim investigator listed several things 'of concern' but there were mitigating factors for each.
A formal complaint was raised for both issues. The outcome was not what I was expecting. The claim was upheld and a payment of £150 raised as a goodwill gesture for incorrectly declining in the first place. However, the decision to cancel the policy remained. Interestingly, this decision was made without taking into account the mitigating factors as these were sent via email to the complaints department but not received. This was re-sent though but the outcome remained the same.
This is prejudicial to the client as they now have to disclose this material fact forever more. I deal with a panel of insurers for general insurance and am unable to provide cover with any of them.
I realise that the insurer has the right to do what they have done, they make the point that this cancellation is under the 14 day period (from renewal) and less serious than voiding the policy mid-term. However, this distinction has no bearing on the eligibility criteria for new business applications. When asked for the reason why the policy was cancelled, the reasons why the claim was initially declined are listed.
In my limited experience of dealing with complaints, I would expect that if taken to the FOS, they would side with the policy holder.
Has any broker had any experiences similar to this that may help?
Thanks in advance.
Long story short, a personal possessions claim was declined recently and the policy cancelled by the insurer shortly after renewal. The claim investigator listed several things 'of concern' but there were mitigating factors for each.
A formal complaint was raised for both issues. The outcome was not what I was expecting. The claim was upheld and a payment of £150 raised as a goodwill gesture for incorrectly declining in the first place. However, the decision to cancel the policy remained. Interestingly, this decision was made without taking into account the mitigating factors as these were sent via email to the complaints department but not received. This was re-sent though but the outcome remained the same.
This is prejudicial to the client as they now have to disclose this material fact forever more. I deal with a panel of insurers for general insurance and am unable to provide cover with any of them.
I realise that the insurer has the right to do what they have done, they make the point that this cancellation is under the 14 day period (from renewal) and less serious than voiding the policy mid-term. However, this distinction has no bearing on the eligibility criteria for new business applications. When asked for the reason why the policy was cancelled, the reasons why the claim was initially declined are listed.
In my limited experience of dealing with complaints, I would expect that if taken to the FOS, they would side with the policy holder.
Has any broker had any experiences similar to this that may help?
Thanks in advance.
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Comments
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What were the issues / mitigating circumstances ?
Did they produce a dodgy receipt ?0 -
No, nothing like that. There were some issues that were not ideal includng time taken to submit the claim and not initially reporting the loss to police.What were the issues / mitigating circumstances ?
Did they produce a dodgy receipt ?
Suffice to say that the issues in combination did not paint the best picture but nothin in isolation was serious enough to decline.0 -
I think your client needs to question the reason for cancellation in writing. It might be worth asking the ABI/FSA for their view on what explanation an Insurer needs to provide when cancelling a policy. When I held the responsibility for cancelling/voiding policies, we were under strict instructions that this should only be done on a very exeptional basis and in most cases the policyholders would have expected it. In recent times, some Insurers appear to be cancelling without much reasoning and do not appear willing to account for their actions. I am not sure that this is correct and I would have thought the ABI/FSA would expect the Insurers to offer clarity to the consumer.
As I have suggested in another thread you posted on, I would suggest your client sends a letter to someone senior at the Insurers, to ask them for a full explanation. It cannot be considered fair that the claim is now upheld/compensation paid and the Insurers have not offered clarity on the cancellation. They might get a letter back, saying that the won't reinstate the policy, but the cancellation is not something that needs to be disclosed when arranging future Insurance. If they were to receive such a letter, this would make it easier in the future.The comments I post are personal opinion. Always refer to official information sources before relying on internet forums. If you have a problem with any organisation, enter into their official complaints process at the earliest opportunity, as sometimes complaints have to be started within a certain time frame.0 -
Have you asked any of your connections at the Insurer whether they have bothered to log the client as having a cancelled policy on the shared database (They don't always bother) and if so whether they will be / would they do you a favour and not log it.0
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Thanks Huckster, your comments on the other thread were very helpful. I thought it best to start a new one rather than hi-jack that one.I think your client needs to question the reason for cancellation in writing. It might be worth asking the ABI/FSA for their view on what explanation an Insurer needs to provide when cancelling a policy. When I held the responsibility for cancelling/voiding policies, we were under strict instructions that this should only be done on a very exeptional basis and in most cases the policyholders would have expected it. In recent times, some Insurers appear to be cancelling without much reasoning and do not appear willing to account for their actions. I am not sure that this is correct and I would have thought the ABI/FSA would expect the Insurers to offer clarity to the consumer.
As I have suggested in another thread you posted on, I would suggest your client sends a letter to someone senior at the Insurers, to ask them for a full explanation. It cannot be considered fair that the claim is now upheld/compensation paid and the Insurers have not offered clarity on the cancellation. They might get a letter back, saying that the won't reinstate the policy, but the cancellation is not something that needs to be disclosed when arranging future Insurance. If they were to receive such a letter, this would make it easier in the future.
I did have a conversation with the individual who made the final decision within the complaints department, requesting that the client be furnished with a detailed explanation why the policy was cancelled. The letter provided simply reiterated listed the same reasons why the claim was originally declined. No explanation why this was re-considered sufficient cause to pay a claim but still cancel the cover.
As per your suggestion on the other thread, the client has recently written to the CEO to express their dissatisfaction. We await a response. In the mean time I wanted to see if there was any precedent that could help.
I will take your suggestion to contact ABI/FSA.0 -
That was my first thought and I initially asked what the exact wording would be on the database. I was told that the shared database only holds details of claims and not policy voiding or cancellation.Have you asked any of your connections at the Insurer whether they have bothered to log the client as having a cancelled policy on the shared database (They don't always bother) and if so whether they will be / would they do you a favour and not log it.
It is still considered a material fact though, that would need to be disclosed on future applications.0 -
if you are a broker, why do you need the help of a forum?Don't put your trust into an Experian score - it is not a number any bank will ever use & it is generally a waste of money to purchase it. They are also selling you insurance you dont need.0
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Thank you for your interest Chanz4.if you are a broker, why do you need the help of a forum?
Quite simply it's because I have never had a case like this before. I'm not too proud to ask for help where it's available. Huckster's comments have been very helpful due to his background.0 -
Speaks volumes for the forum though, doesn't it???
no just worrys me about ever using brokersDon't put your trust into an Experian score - it is not a number any bank will ever use & it is generally a waste of money to purchase it. They are also selling you insurance you dont need.0
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