Upheld: unfair pricing / inadequate disclosure of premium increase potential complaint against INSURANCE FACTORY LIMITED

Decision detail

Summary

Mr S purchased a pet lifetime insurance policy from Insurance Factory in 2020 for £39.05 per month. Over five years, premiums increased steadily to £170.99 per month by 2024, then jumped to £324.99 per month in 2025—a 90% increase. Mr S complained that he felt held to ransom as he could not switch policies without affecting his pre-existing condition cover. The FOS upheld the complaint, finding that Insurance Factory's disclosure that premiums could be 'significant' was insufficiently clear and did not adequately convey the potential scale of increases. The ombudsman awarded £200 compensation for distress, emphasising that lifetime policies require clearer long-term cost explanations.

The Ombudsman's reasoning

The ombudsman found that while Insurance Factory disclosed that premiums could increase significantly, the wording was insufficiently clear. The term 'significant' is subjective and does not adequately inform consumers of the potential financial impact. The ombudsman noted that lifetime policies require particular clarity because consumers cannot easily shop around without losing cover for pre-existing conditions. The wording also implied increases would only be significant if claims were made, yet Mr S had made claims in previous years without experiencing such substantial increases. The £154 monthly increase (£1,848 annually) was substantial enough that Mr S could not have reasonably foreseen it based on the information provided.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website