Upheld: Travel / life insurance claim disputes complaint against Cirencester Friendly Society Limited

Decision detail

Summary

Mr P complained that his income protection insurance benefit was considerably less than his sum insured and that he had been over-insured. Cirencester calculated his 2014 claim benefit at 60% of his pre-incapacity earnings using his most recent available accounts (to January 2013). When Mr P provided more recent accounts showing higher earnings, Cirencester offered to recalculate the benefit and refund premiums to reflect the over-insurance, plus interest. Mr P rejected the offer because it included a reduction to his credit balance. The ombudsman upheld the complaint but found Cirencester's settlement offer fair, as the over-insurance resulted from Mr P overstating his earnings when applying for the policy, and the credit balance reduction was a reasonable consequence of the premium refund.

The Ombudsman's reasoning

The ombudsman found that Cirencester correctly calculated the initial benefit based on the earnings evidence provided at the time of claim. The over-insurance resulted from Mr P apparently overstating his earnings when applying for the policy, which was not Cirencester's fault. However, Cirencester's offer to recalculate benefit using more recent accounts and refund premiums to reflect the over-insurance was fair and reasonable. The reduction of the credit balance was justified as a consequence of receiving the premium refund. The ombudsman rejected Mr P's argument that the credit balance reduction was unfair, as it logically followed from the premium refund.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website