Upheld: Service failures generally complaint against Collingwood Insurance Company Ltd
Financial Ombudsman decision DRN-4584659 of 2024-03-15T00:00:00+00:00. Service failures generally complaint against Collingwood Insurance Company Ltd. Outcome: Upheld.
Decision detail
| Reference | DRN-4584659 |
|---|---|
| Decision date | 2024-03-15T00:00:00+00:00 |
| Firm | Collingwood Insurance Company Ltd |
| Product | Motor insurance |
| Claim type | Service failures generally |
| Outcome | Upheld |
| Remedy | Collingwood must: (1) amend its own and external databases to show Mr A cancelled the policy; (2) resolve the debt collector matter expeditiously by writing off the additional premium so Mr A is no longer pursued; (3) act as though the policy was cancelled when the additional premium was first requested; (4) confirm in writing what it will do to amend matters and write off the additional premium; (5) if requested, provide a letter explaining the debt was due to its error and that Mr A chose to cancel the policy; (6) pay Mr A £200 compensation. Legal costs were not awarded as legal representation was not necessary for this informal service. |
Summary
Mr A obtained motor insurance from Collingwood via a broker based on a declared no claims bonus. When Collingwood discovered the NCB declaration was incorrect, it demanded an additional premium without offering alternatives. Mr A refused to pay, and Collingwood cancelled the policy while still charging the additional premium, resulting in an outstanding balance of approximately £1,000 that was sent to debt collectors. The Ombudsman upheld the complaint, finding Collingwood acted unfairly by not offering cancellation or proportionate claims settlement options as alternatives, and by applying the additional premium despite Mr A's explicit refusal. Collingwood was ordered to write off the additional premium, resolve the debt collection matter, amend records to show Mr A cancelled the policy, and pay £200 compensation.
The Ombudsman's reasoning
The Ombudsman found that while Collingwood was entitled to review its position upon discovering the incorrect NCB declaration, it acted unfairly by unilaterally applying an additional premium without offering alternatives. The Insurance Act 2015 provides for proportionate claims settlement in cases where there is no claim, and Collingwood cannot seek a better position than the legislation allows. The fair approach would have been to offer either cancellation or proportionate claims settlement as alternatives to the additional premium demand. Since Mr A was told he could choose whether to pay the additional premium and chose not to, it was extremely unfair to apply it anyway. The additional premium should be written off and treated as though the policy was cancelled when the demand was first made.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| Collingwood Insurance Company Ltd, all decisions | 23 | 50% |
| Service failures generally, all decisions | 32,767 | 33% |
| Motor insurance, all decisions | 24,036 | 35% |
Source
Read the original decision on the Financial Ombudsman Service website