Excessive profit from deducting FY premium from Pet Insurance Claim

Savvy_Bird

Having had to sadly have our dog PTS we submitted a claim to our insurer and were shocked to find that less that 25% of the value of the claim was paid out.  Most of this was caps and items not covered, but almost £1000 was the deduction of 10 remaining months of premium being deducted.  The official response to my complaint that this is excessive when the insurer bears no further risk is 

"The remaining premiums in your policy year were deducted from your claim, totalling £965.70. Your policy is an annual agreement of cover, which we allow to be paid in monthly instalments. In the event of a cancellation, for whatever reason and where a claim has been accepted, we are required to deduct the outstanding payments from your claim outcome. Your policy will be automatically cancelled in the event that your pet sadly passes away as your policy cover ends in this eventuality."

My question is that in cancelling the policy as cover ends, how can the insurer justify the full annual premium?  They have offered a goodwill gesture of £250 and my choices are to accept or to refer to the ombudsman.  This feels like excessive profiteering, but would appreciate your opinions/advice!

Thank You!!

dunstonh

My question is that in cancelling the policy as cover ends, how can the insurer justify the full annual premium?  

They have answered that and they are correct.

They have offered a goodwill gesture of £250 and my choices are to accept or to refer to the ombudsman.  This feels like excessive profiteering, but would appreciate your opinions/advice!

Its the same in other annual policies where you choose to use a loan to pay the premiums.    The policy coverage is for any incident that happens between two dates.   Whether that incident is on day 1 or day 364.

DullGreyGuy

Savvy_Bird said:

Having had to sadly have our dog PTS we submitted a claim to our insurer and were shocked to find that less that 25% of the value of the claim was paid out.  Most of this was caps and items not covered, but almost £1000 was the deduction of 10 remaining months of premium being deducted.  The official response to my complaint that this is excessive when the insurer bears no further risk is 

"The remaining premiums in your policy year were deducted from your claim, totalling £965.70. Your policy is an annual agreement of cover, which we allow to be paid in monthly instalments. In the event of a cancellation, for whatever reason and where a claim has been accepted, we are required to deduct the outstanding payments from your claim outcome. Your policy will be automatically cancelled in the event that your pet sadly passes away as your policy cover ends in this eventuality."

My question is that in cancelling the policy as cover ends, how can the insurer justify the full annual premium?  They have offered a goodwill gesture of £250 and my choices are to accept or to refer to the ombudsman.  This feels like excessive profiteering, but would appreciate your opinions/advice!

Thank You!!

You've bought an annual product and received a loan for the premiums to enable you to repay it monthly. 

If you got a loan, bought a top of the range laptop and left the laptop on the train by accident you can't then stop paying the loan just because you dont have the laptop anymore.

Once a policy has had a claim on it you can no longer cancel it for a refund. Customers become very bad payers for the remainder of their loan when there is nothing left to be insured hence why insurers deduct the outstanding balance of the loan from the settlement. 


There are, or at least at last check, some pet insurance policies that are monthly with an annual review. In those cases there is no loan involved and in the event of the death of the pet you can just stop making payments. They are certainly the minority and in principle should be higher cost given the lower guaranteed income. 

Slinky

This won't help the OP sadly, but for others reading this, PetPlan don't do this, you pay monthly and cover ceases at the date your pet passes away.

LillythePink

I used Pet Plan for my cat's insurance.  I can't rate them enough - took the cover out in April and paid monthly, unfortunately he was hit by a car last month and died, I had death cover and they paid out in full (the value of the death cover with no excess deducted) and then refunded me a part month's premium (which I actually didn't expect)

I am sorry to hear about your loss

XRS200

Wonder if there has ever been an ombudsman ruling on whether a pet policy can continue on a replacement pet, the way car insurance can.  Sorry if that sounds insensitive.

Savvy_Bird

Thanks everyone.  It has certainly opened my eyes to checking for details.

DullGreyGuy

XRS200 said:

Wonder if there has ever been an ombudsman ruling on whether a pet policy can continue on a replacement pet, the way car insurance can.  Sorry if that sounds insensitive.

Ombudsman decisions do not form precedent so even if there had been a or multiple rulings it wouldn't bind the next case to be settled the same way. You can search decisions by ombudsman (but not investigators or adjudicators).

There are cases like the OPs however they dont deny the premium is due but complain that it has to be paid as a lump sum rather than continuing to be taken monthly (eg https://www.financial-ombudsman.org.uk/decision/DRN-3188475.pdf). One case which was upheld was slightly different in that the insurer had said they'd take the payment by DD but instead took it from the money owed to the vet which the customer said lead to embarrassment when they couldn't afford to repay the vet... I question why that was fully upheld as clearly the customer was going to bounce the DD but ultimately it's a case of the insurer not doing what they said. 

A quick search doesn't show any cases of people asking to transfer the remainder to the replacement pet. 

As well as non-binding decisions the ombudsman does make statements to the market on how it expects certain reoccurring matters to be handled. These are naturally close to being binding, though ultimately each complaint is looked at on its own merits because every policy wording and website etc is different. 

sheramber

XRS200 said:

Wonder if there has ever been an ombudsman ruling on whether a pet policy can continue on a replacement pet, the way car insurance can.  Sorry if that sounds insensitive.

How many people replace a pet within a month as car requires?

DullGreyGuy

The other point though... the headline states "excessive profit" and yet, after deducting the premiums the insurer still had to payout so claim > premiums... where's the profit?