ProtectionApr 6 2016

Insurer admits mis-informing adviser’s IP client

twitter-iconfacebook-iconlinkedin-iconmail-iconprint-icon
Search supported by
Insurer admits mis-informing adviser’s IP client

Windsor-based Assurant Solutions UK has admitted it made “fundamental errors” in dealing with a legitimate claim against an income protection policy.

After telling the claimant for six months she was entitled to nothing, a pay-out was finally made once adviser Bob Cook, founder of Best Income Protection, pursued the company.

Mr Cook, who sold the client the policy in June 2008, pursued the company for three months until Assurant finally issued an apology and payment in March.

Resurrecting the spectre of past criticisms of the protection market that advisers have spent years trying to erase, policyholder Shas Iqbal said the stress and sleepless nights she has suffered have “totally destroyed” her faith in the insurance industry.

Certain his client is far from alone in having her claim wrongly declined in light of his dealings with Assurant, Mr Cook has referred the company to the Financial Conduct Authority (FCA) to investigate.

“IFAs will have clients in the same situation,” he said. “The client walks away thinking they have been conned and sold a bad policy. The way the claim was handled, the complete lack of knowledge of everybody in the department [at Assurant] led me to think it is not an isolated incident.”

His client, Mrs Iqbal, purchased the income protection to cover 75 per cent of her monthly income, less any sick pay, if she was unable to work through illness.

As her normal gross monthly income was £2,400, the expected policy benefit was £1,800 minus the employer sick pay of £1,000, meaning she was entitled to £800.

But Mr Cook said Assurant, part of the Assurant Group that dates back to 1941, instead deducted the employer’s sick pay from the benefit purchased and claimed his client was entitled to nothing.

In a letter to Mr Cook dated 31 March 2016, Assurant admitted it had inflicted “delays, misinformation and inconvenience” on Mrs Iqbal.

“We made fundamental errors on this claim in our decision-making and as a consequence the information relayed to both of you (on a number of occasions) was clearly incorrect,” the letter said.

Assurant agreed to pay her £800 compensation on top of the monthly benefit of £802.45 it had recalculated.

A spokesperson for Assurant declined to comment on the specific case and the fact the complaint had been made about its conduct to the FCA.

Take-up of income protection remains low, and advisers have criticised Assurant for bringing an industry with an already fragile reputation into disrepute.

Tom Binstead, executive consultant at Gloucester-based financial advice firm Kellands, said: “Stories like this are very damaging and make customers nervous that they are paying for insurance that they will never get the benefit of.”

A Scottish Widows poll of 5,000 adults in November 2014 found fewer than one in 20 people have income protection cover, despite the same poll revealing 60 per cent of those asked didn’t have enough savings to last six months out of work.

Protection providers have invested heavily in improving their image, including cutting the number of claims they decline, after media coverage highlighted problems with legitimate claims not being paid.

Awareness campaigns such as Seven Families were launched after the reputation of income protection was stained by the mis-selling scandal in the PPI market.

Peter Chadborn, an IFA at Plan Money in Colchester, urged advisers to reassess the insurers they use.

He said: “As an intermediary, make sure you’re choosing a quality provider for your client, where you have an open dialogue and a good working relationship with the insurance company.

“Sounds like this adviser had a difficult job trying to reason with the company. If it took this long to get that result, it is a company that is not particularly easy to deal with.”

Mr Binstead called on the regulator to respond to the case by ensuring policy wordings are not “misleading or difficult to interpret”.

A spokesman for the FCA stated the regulator does not comment on individual cases.