Upheld: Travel / life insurance claim disputes complaint against Cirencester Friendly Society Limited

Decision detail

Summary

Mr W claimed income protection insurance benefits after stopping work due to poor health in July 2014. The Society accepted the claim but calculated his benefit by including only a proportion of a dividend paid in November 2013, whereas Mr W believed the full dividend should be included in calculating his 60% pre-incapacity earnings entitlement. The Society argued that only the portion of the dividend earned during the relevant 12-month period should count, but the policy terms did not explicitly state this limitation. The ombudsman upheld the complaint, finding that the policy terms could reasonably be interpreted as Mr W understood them, particularly given that a Society adviser had confirmed this interpretation. The ombudsman required the Society to recalculate benefits according to Mr W's interpretation, pay interest on the shortfall, and pay £150 compensation.

The Ombudsman's reasoning

The ombudsman found that while the Society's approach was not completely unfair on its face, the policy terms as drafted by the Society made no mention of reducing dividends based on when the underlying work was performed. The terms could easily be interpreted as Mr W understood them, particularly given that a Society adviser had confirmed this interpretation in October 2014. The ombudsman preferred Mr W's interpretation as the fair and reasonable outcome in the circumstances, noting the Society could have clearly explained its approach in the policy terms if it intended a different interpretation.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website