SERVICE: Life
OUTCOME: Not upheld
Issues: Cancellation of contract or lapse, Standard of service - CGA/FTA
Summary: Mr and Mrs R’s* complaint was not upheld, because the insurer did not have to remind them that they had said they wanted to cancel the policy.
Mr and Mrs R together with a trust (the owners), held key person insurance for Mrs R’s business partner, Joyce.
In about March 2022, Mrs R asked the insurer to cancel the cover for Joyce, as she had retired from the business. The insurer asked Mrs R to get the owners to sign the cancellation form.
In November 2023, Mr R provided the completed cancellation form to the insurer, asking the insurer to backdate the cancellation to March 2022 and refund the premiums paid since then. The insurer declined to do so, saying the cancellation could not take effect until the cancellation form had been signed by the owners.
Mr R made a complaint, saying Mrs R had been busy and had missed the email from the insurer asking the owners to complete the cancellation form. Mr R believed the insurer was aware that the owners no longer needed Joyce’s cover; Joyce had cancelled the corresponding cover she held for Mrs R; and they had been clear in their communication that they wanted the policy cancelled “immediately”.
The case manager’s assessment
The policy said that it could be cancelled at any time by the owners in writing, and only premiums paid in advance of the date the cancellation request was received would be refunded.
The insurer did not have a legal obligation to follow-up, to remind Mrs R that she had said she wanted the cancel the policy. Therefore, the case manager believed the complaint was mainly about customer service, because the insurer did not send Mrs R a reminder.
While the insurer had not sent Mrs R a reminder, it had sent other policy information, including renewal documents, which could have served as a reminder that the policy had not been cancelled. In addition, the premiums continued to be paid monthly.
The insurer was only required to refund any premiums paid in advance of the date the cancellation form was received. Any other premiums were considered “used”, as a claim would have been payable during the period they were paid.
Mr R believed the insurer had breached section 8 of the Consumer Guarantees Act 1993 (CGA), because the policy was no longer “reasonably fit for [the] particular purpose”, at the renewal after Mrs R’s initial email. Mr R believed, at that point, the insurer should have told him that the policy was no longer fit for use, because Joyce was no longer working in the business.
However, the case manager believed that Mr and Mrs R were already aware at that point that they wanted to cancel the policy. The insurer did not need to tell them that was the case. Further, the case manager did not believe Mr and Mrs R had relied on the insurer’s “skill or judgment” at renewal. Rather, Mr R said that he had not read the renewal documents, assuming they related to other cover. Therefore, the case manager did not believe there was a breach of the CGA.
While it may have been better customer service for the insurer to have sent Mrs R a reminder, the case manager did not believe it was obliged to do so. The IFSO Scheme was unable to require the insurer to refund the premiums paid.
*Name has been changed
Complaint No: 00231382