Upheld: inadequate disclosure of premium increase risk; mis-selling complaint against Allianz Insurance Plc

Decision detail

Summary

Ms C purchased a lifetime pet insurance policy from Allianz in August 2023 with a first-year premium of £491.98. Her renewal premiums increased by 55% in the second year and 59.30% in the third year, prompting her complaint. Allianz argued the premiums were correctly assessed under its underwriting guide, but the ombudsman found that Allianz failed to adequately warn Ms C at the point of sale about the potential for such substantial uncapped premium increases in lifetime policies. Although the firm did not treat Ms C unfairly compared to other policyholders and she benefited from a double online discount, the ombudsman upheld the complaint and ordered £100 compensation for the shock of the premium increases.

The Ombudsman's reasoning

While Allianz correctly applied its underwriting guide and did not single out Ms C unfairly compared to other policyholders in similar circumstances, the firm failed to provide adequate warning about potential premium increases at the point of sale. The word 'substantial' used in the sales script and IPID is insufficient to convey the reality of uncapped premium increases of 55-60% that can occur in lifetime pet policies. The ombudsman distinguished this case from capped policies where 'substantial' would be adequate. Ms C was entitled to clear and unequivocal information about the potential for very significant premium increases given the uncapped nature of the policy and the impact of claims on future premiums.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website