Not upheld: premium pricing fairness and transparency complaint against Marshmallow Insurance Limited

Decision detail

Summary

Mr T complained about premium increases on his motor insurance policy with Marshmallow, both at renewal in 2025 and following a mid-year change from Vehicle A to Vehicle B. Mr T disputed the fairness of the increases, particularly as the vehicle change was not his choice due to Vehicle A being unsafe. He also questioned whether he should continue paying for Vehicle A during periods when he was not actively using it. The ombudsman found that Marshmallow acted fairly and in line with pricing rules, as each insurer is entitled to set its own risk view and pricing, provided it is applied consistently. The premium increase reflected Marshmallow's assessment of the increased risk associated with Vehicle B, not a penalty for the change. The ombudsman also found it fair that Mr T continued paying for Vehicle A as Marshmallow was still providing cover and would have been liable for valid claims.

The Ombudsman's reasoning

The ombudsman reasoned that each insurer is entitled to set its own view of risk and pricing. While Marshmallow must set premiums fairly and consistently, the ombudsman was satisfied that Marshmallow had done so based on the underwriting evidence provided. The vehicle change was not a penalty but a reflection of increased risk associated with Vehicle B. The fact that the change was not Mr T's choice was not relevant because the premium increase reflected risk assessment, not punishment. Mr T had the option to reject the premium and move to another insurer. Regarding the period when Vehicle A was not actively used, Marshmallow was still providing cover and would have been liable for valid claims, so continued premium payment was fair.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website