Partially upheld: inadequate communication and documentation in third-party claim settlement; failure to provide supporting evidence for settlement decision complaint against Society of Lloyd's
Financial Ombudsman decision DRN-6363611 of 2026-05-15T00:00:00+00:00. inadequate communication and documentation in third-party claim settlement; failure to provide supporting evidence for settlement decision complaint against Society of Lloyd's. Outcome: Partially upheld.
Decision detail
| Reference | DRN-6363611 |
|---|---|
| Decision date | 2026-05-15T00:00:00+00:00 |
| Firm | Society of Lloyd's |
| Product | motor insurance |
| Claim type | inadequate communication and documentation in third-party claim settlement; failure to provide supporting evidence for settlement decision |
| Outcome | Partially upheld |
| Remedy | Lloyd's must pay Mr O £300 compensation in addition to the £200 already paid, within 28 days of acceptance of the final decision. If payment is made after the deadline, interest at 8% per annum simple must be paid from the deadline date to the date of payment. |
Summary
Mr O complained about Lloyd's handling of a third-party motor insurance claim arising from a June 2025 road collision where liability was disputed. Lloyd's settled the claim on a 50-50 basis and paid £7,954.88 to the third party without Mr O's prior consent or adequate explanation. Mr O repeatedly requested documentation supporting the settlement but Lloyd's could not provide key documents such as engineer's reports or hire packs, citing a commercial agreement with the credit hire provider. The ombudsman upheld the complaint in part, finding the 50-50 settlement decision was fair and reasonable but that Lloyd's failed to provide adequate communication and documentation, causing avoidable frustration. Lloyd's was ordered to pay £300 additional compensation on top of the £200 already offered.
The Ombudsman's reasoning
The ombudsman found that Lloyd's decision to settle the third-party claim on a 50-50 basis was fair and reasonable in the absence of independent evidence supporting either party's account, and that Lloyd's was entitled under policy terms to settle claims on behalf of its insured. However, the ombudsman upheld the complaint in part because Lloyd's failed to provide adequate communication and documentation regarding the settlement. The ombudsman noted that while the absence of key documents (hire pack and engineer's report) meant neither Mr O nor the ombudsman could verify whether the settlement was reasonable, this lack of clarity and Lloyd's repeated failure to explain how the claim was assessed caused avoidable and prolonged frustration. The ombudsman rejected the argument that the compensation was punitive, finding instead that it was warranted due to the persistent nature of Lloyd's failure to demonstrate proper assessment of the claim despite Mr O's repeated requests for information.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| Society of Lloyd's, all decisions | 596 | 32% |
Source
Read the original decision on the Financial Ombudsman Service website