Not upheld: GAP / warranty insurance mis-selling complaint against HSB Engineering Insurance Limited

Decision detail

Summary

J, a property developer, complained that HSB Engineering Insurance Limited unfairly refused to provide a structural warranty for a building development after withdrawing an initial quotation due to delays. HSB's refusal was based on J no longer meeting its risk criteria, which included consideration of claims made against warranties issued for other developments involving J's directors, including a claim from twelve years prior. The Ombudsman found that HSB's risk-based underwriting decision was fair and reasonable, as insurers are entitled to make commercial judgments about risk assessment. The complaint was not upheld, and no remedy was ordered.

The Ombudsman's reasoning

The Ombudsman determined that insurers are entitled to make commercial judgments about risk assessment and which risks to accept. HSB's decision to consider historic claim data linked to J's directors as part of its risk criteria was a legitimate underwriting decision. The Ombudsman found no evidence that HSB acted unfairly or unreasonably, and noted that similar assessments would be expected from any insurer. The Ombudsman also clarified that complaints about HSB's decisions on the underlying claims would need to be made by the developer to whom the warranties were issued, not by J.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website