Income Protection Insurance premiums wrong

bolton72

20 years ago, I took out income protection where the benefit increases in line with inflation. The premiums were also supposed to go up in line with inflation.

This is the first time I have needed to claim.

They said that the benefit has increased but they have had a system error and not increased my premiums. If I want the calculated benefit, I need to pay the premium increases they have not collected over 20 years. Thats about £20,000!

Can they do that??

Hoenir

bolton72 said:

The premiums were also supposed to go up in line with inflation.

In 20 years you never noticed this and queried it with the insurer ? 

XRS200

Did you get any correspondence yearly about the index linking?

bolton72

I didn’t get any correspondence and I didn’t question it. It was still £160 / month on the last direct debit.

bolton72

Thanks for the interest but do you think they can do this? When I got my policy wording it said it was index linked and premiums would increase. It now seems obvious if I have checked the premiums
were not changing enough (they did a little).

However, if they had offered me a fixed price non index linked, I would not have purchased it. I am thinking they should either provide me with the agreed product and change the price from now on or refund me all my premiums because I did not get the product was sold.

BarelySentientAI

Maybe they should pay you the agreed product when you have paid the agreed price.

Hoenir

bolton72 said:

I am thinking they should either provide me with the agreed product and change the price from now on or refund me all my premiums because I did not get the product was sold.

You didn't pay the premiums for the product that's the bottom line. Meanwhile you've enjoyed 20 years of cover. 

Annemos

I just did a search on the FOS website decisions and the case below came up   (Searched on:  "insurer did not index link income protection premiums"). 

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https://www.financial-ombudsman.org.uk/decision/DRN3487263.pdf

In this case it says..... 

Introduction:  In November 2013, Ms M received a letter from Wesleyan about policy C. It advised her that her annual premiums reviews had not been carried out correctly, therefore it had been charging her a lower premium than it should have done. At that time, Ms M’s monthly premium was £34.33, but she should have been paying £50.72. Wesleyan advised that it would start collecting the correct premium the following month and that it would waive the amount owed until that point. However, it gave Ms M the option to keep the same premium but have reduced cover.

Ombudsman Findings:      Wesleyan amended the premium to the correct amount that it should have been charging Ms M. I am satisfied that Wesleyan was able to do this and I note that its error meant that Ms M had paid £532.21 less than she should have done in premiums to that point. I think it was reasonable for Wesleyan to waive this amount, given that its own administration failings were responsible for Ms M previously being charged the wrong premium. I am further satisfied that this adequately compensates Ms M for Wesleyan’s errors here

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I wonder if you might have a chance if you take this to the Financial Ombudsman? But I think you would have to have all the original documentation.

(Also I am not an expert on this... but looking at the next case, you would have to be sure that you have not overlooked signing some periodic requests, to sign any required forms to keep the ongoing indexation linking?

XRS200 has also asked you about this. Can the Company prove they sent any to you? ) 



Here's another case regarding an unreasonable error:   in this one they gave an option for the underpaid premiums to be written off AND he got 300 pounds compensation! (Searched on "annual premium review carried out incorrectly")

https://www.financial-ombudsman.org.uk/decision/DRN-4673361.pdf

dunstonh

I wonder if you might have a chance if you take this to the Financial Ombudsman? But I think you would have to have all the original documentation.

There is a major difference here.   The FOS case wasn't claiming on the policy.    When no claim has occurred, then the common position is not to collect back premiums.    However, in this case, there is a claim.

Annemos

If the Poster could prove that the original error (incorrect premiums) was due to Administrative Failings, could the Poster still have a chance of at least getting some redress? Their error remains the same, claim or no claim? 

BarelySentientAI

There's always a chance, and it's not a spurious complaint so making it would not be wasting anyone's time.

FOS decisions don't set precedent and none can give a complete and accurate guide to what could happen in this case though.