Upheld: unfair claim settlement and failure to comply with Insurance Act 2015 complaint against Accelerant Insurance Europe SA/NV UK Branch

Decision detail

Summary

Mr Z complained about Accelerant's proportionate settlement of his commercial buildings insurance claim following a fire in April 2022. Accelerant had reduced the claim settlement by approximately 8.4% based on an average clause, arguing Mr Z had underinsured the property by estimating the rebuild cost at £2,100,000 when Accelerant's surveyor valued it at £2,800,000 and Mr Z's surveyor at £1,900,000. The ombudsman found that Mr Z's estimate fell within the reasonable range and constituted a fair presentation under the Insurance Act 2015, meaning Accelerant had no legal remedy to proportionately settle. The ombudsman upheld the complaint and required Accelerant to make an additional payment without underinsurance reduction, plus interest and £350 compensation.

The Ombudsman's reasoning

The ombudsman found that Mr Z made a fair presentation of the risk under the Insurance Act 2015 because his estimate of £2,100,000 fell within the reasonable range between the two professional valuations (£1,900,000 and £2,800,000), despite including some building cost inflation. The average clause relied upon by Accelerant is disadvantageous compared to the Act's position and cannot be enforced without meeting transparency requirements, which Accelerant failed to do. Even if Mr Z had not made a fair presentation, Accelerant provided no evidence of how a higher sum insured would have affected the premium, so it had no remedy under the Act. Therefore, Accelerant acted unlawfully by proportionately settling the claim.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website