Upheld: unfair claim settlement - proportionate reduction for underinsurance without adequate underwriting evidence complaint against AXIS Specialty Europe SE
Financial Ombudsman decision DRN-6253733 of 2026-04-07T00:00:00+00:00. unfair claim settlement - proportionate reduction for underinsurance without adequate underwriting evidence complaint against AXIS Specialty Europe SE. Outcome: Upheld.
Decision detail
| Reference | DRN-6253733 |
|---|---|
| Decision date | 2026-04-07T00:00:00+00:00 |
| Firm | AXIS Specialty Europe SE |
| Product | building insurance |
| Claim type | unfair claim settlement - proportionate reduction for underinsurance without adequate underwriting evidence |
| Outcome | Upheld |
| Remedy | Settle claim in full without proportionate reduction; add 8% simple interest per annum from date reduced amount was offered until date of settlement |
Summary
Ms S claimed on her building insurance policy for water damage in January 2024. AXIS accepted the claim but applied a proportionate reduction under its Condition of Average clause, arguing the property was underinsured (sum insured £1.2m vs rebuild cost £2.4m). Ms S complained that AXIS had miscalculated the rebuild figure and provided insufficient information at policy inception. The ombudsman upheld the complaint, finding that although AXIS proved underinsurance, it failed to calculate the reduction correctly and crucially could not provide underwriting evidence supporting its claim that it would have charged more for the correct sum insured. AXIS was directed to settle the claim in full with interest.
The Ombudsman's reasoning
Although AXIS demonstrated the property was underinsured and the policy terms permitted proportionate settlement, AXIS failed to calculate the reduction correctly using the revised sum insured figure and the proper formula (premium paid / correct premium x loss = claim payable). Critically, AXIS could not provide persuasive underwriting evidence to support its assertion that it would have charged a higher premium for the correct sum insured. Without such evidence, it was unfair to reduce the settlement amount.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| AXIS Specialty Europe SE, all decisions | 74 | 30% |
Source
Read the original decision on the Financial Ombudsman Service website