Not upheld: Account administration errors complaint against Zurich Assurance Ltd

Decision detail

Summary

The estate of Mr M complained that Zurich Assurance Ltd failed to provide renewal terms on his reviewable whole of life plan before the 1 June 2023 anniversary date, with terms not arriving until 6 July 2023. The late Mr M died on 11 June 2023 within the grace period. The estate argued that the delay prevented it from maintaining the existing level of cover and sought pro-rata premium deduction and compensation for distress. Zurich acknowledged the delay and agreed to honour the higher sum assured of £974,622 with the corresponding increased premium of £63,646.14 deducted. The ombudsman upheld Zurich's position, finding that the firm had put the estate back in the position it would have been in had the delay not occurred, and that the policy terms explicitly permitted full premium deduction during the grace period.

The Ombudsman's reasoning

The ombudsman found that Zurich's administrative delay in sending renewal terms did not result in unfair treatment because: (1) Zurich put the estate back in the position it would have been in had the delay not occurred by honouring the higher sum assured; (2) it would be unfair to provide the higher level of cover without deducting the corresponding premium, as this would place beneficiaries in a better position than if the renewal process had been conducted correctly; (3) the policy terms explicitly provide for deduction of outstanding contributions from the benefit payable if death occurs during the grace period; (4) pro-rata deduction was not supported by the policy terms; and (5) distress and inconvenience awards cannot be made to an estate as the late Mr M died before becoming aware of or being affected by the error.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website