Upheld: Travel / life insurance claim disputes complaint against First Central Underwriting Limited
Financial Ombudsman decision DRN-6275104 of 2026-06-17T00:00:00+00:00. Travel / life insurance claim disputes complaint against First Central Underwriting Limited. Outcome: Upheld.
Decision detail
| Reference | DRN-6275104 |
|---|---|
| Decision date | 2026-06-17T00:00:00+00:00 |
| Firm | First Central Underwriting Limited |
| Product | Motor insurance |
| Claim type | Travel / life insurance claim disputes |
| Outcome | Upheld |
| Remedy | First Central Underwriting Limited must: (1) Pay Mr P £100 compensation for distress and inconvenience caused; (2) Change the cancellation on internal and external databases to a customer-led cancellation; (3) Subject to reasonable proof, refund Mr P the difference between the premium paid for the cancelled policy and the amount paid for the replacement policy with the cancellation declared; (4) Provide a letter confirming the policy was cancelled by First Central in error and should have been a customer-led cancellation. Compensation must be paid within 28 days, with interest at 8% per annum if paid later. |
Summary
Mr P purchased car insurance online, declaring five years NCD from van insurance and answering 'no' to questions about claims history, despite an open claim existing. First Central discovered the undisclosed claim and open claim, and demanded an additional premium. When Mr P refused to pay, First Central cancelled the policy without offering Mr P the option to cancel it himself. The ombudsman found that while Mr P's failure to disclose the claim was a careless qualifying misrepresentation, First Central's handling was unfair because it did not clearly communicate before purchase that van insurance NCD would not be accepted, and CIDRA does not permit automatic premium increases without customer agreement. The ombudsman upheld the complaint, requiring First Central to pay £100 compensation, change the cancellation record to customer-led, refund any excess premiums Mr P paid on replacement insurance, and provide a letter confirming the cancellation was in error.
The Ombudsman's reasoning
The ombudsman found that while Mr P made a careless qualifying misrepresentation regarding his claims history (failing to disclose the open claim despite clear questions and guidance), First Central's handling of the situation was unfair. First Central did not clearly communicate before purchase that it would not accept NCD from van insurance, contrary to CIDRA principles. More significantly, CIDRA permits insurers to change terms, reduce claim payments proportionately, or cancel policies, but does not automatically permit charging higher premiums. Where a customer refuses an additional premium, fairness requires offering the customer the option to cancel the policy themselves, which First Central failed to do. The ombudsman was not persuaded by First Central's claim to have offered this option, as the email correspondence clearly stated cancellation would occur if the premium was not paid. Additionally, First Central should have provided confirmation that the cancellation was in error to assist Mr P with future insurance applications, as all insurers ask about previous cancellations.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| First Central Underwriting Limited, all decisions | 212 | 42% |
| Travel / life insurance claim disputes, all decisions | 20,052 | 31% |
| Motor insurance, all decisions | 24,103 | 35% |
Source
Read the original decision on the Financial Ombudsman Service website