Upheld: Travel / life insurance claim disputes complaint against SCOR UK Company Ltd

Decision detail

Summary

A, a limited liability company, complained about SCOR's handling of a commercial legal expenses insurance claim for a contract dispute. SCOR's panel firm opined the claim lacked reasonable prospects of success and that arbitration (excluded from the policy) was the required forum. SCOR initially directed A to obtain a barrister's opinion to challenge this, leading A to incur over £4,000 in legal costs for an alternative solicitor's opinion. SCOR then refused to consider the alternative opinion, citing it was not from a barrister and that arbitration was excluded. The ombudsman upheld the complaint, finding SCOR should have clearly communicated the arbitration exclusion from the outset rather than misleadingly directing A to obtain a barrister's opinion. SCOR was ordered to reimburse A's legal costs plus interest and pay £350 inconvenience compensation.

The Ombudsman's reasoning

SCOR was entitled to rely on the panel firm's opinion that the claim lacked reasonable prospects of success and that arbitration was excluded from the policy. However, SCOR acted unfairly by not clearly communicating the arbitration exclusion as the reason for declining cover. Instead, SCOR's email was misleading, directing A to obtain a barrister's opinion when no cover was available due to the arbitration exclusion. This led A to incur unnecessary legal costs of over £4,000. While SCOR was not required to consult A before invoking the exclusion, they should have been transparent about it from the outset. The ombudsman rejected A's claim for compensation at commercial rates for time spent, as this is not consistent with FOS practice for inconvenience awards.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website