The Financial Ombudsman Service has found against Sesame in a case where a consumer alleged that her adviser failed to pass her claims history details to her new insurer.
The client, called Mrs M, met with an adviser from the network and on his advice, cancelled her existing home insurance policy and took out a new home insurance policy.
Following a fire at Mrs M’s home, she made a claim under her policy.
The new insurer started dealing with the claim, but then found that Mrs M had made previous claims which had not been disclosed to it when she applied for the policy.
It refused to deal with the claim and voided the policy because of non-disclosure.
Mrs M made a complaint to Sesame, explaining she had told the adviser of two previous claims to her last insurer, thinking this information had been passed on to the new insurer.
Sesame paid her £200 compensation for the delay, but unhappy with this response, Mrs M brought her complaint to Fos.
The ombudsman’s adjudicator upheld the complaint, stating Sesame should pay compensation equivalent to what Mrs M would have received, had she had cover, along with a further £300 compensation for the upset caused.
Sesame did not agree with the adjudicator’s decision, accepting its adviser had failed to pass on the claims history, but suggesting the new insurer should be liable for part of the claim payment.
It did offer to pay Mrs M £10,000 compensation to settle the matter, as well as a further £500 for the distress caused.
She refused this offer, so the matter was passed to ombudsman Chantelle Hurn-Ryan.
Before making a final decision, the ombudsman asked both parties for further comments, with Mrs M stating her new insurer no longer required her to repay the amount it paid on her claim, but she did incur a £50 charge for it to start dealing with the claim.
Sesame meanwhile pointed out that no credit has been given for the fact that an offer of £10,000 was made to Mrs M and it still believes that the new insurer has a responsibility, as it would have offered cover had it known of her previous claims.
Ms Hurn-Ryan said that while she appreciates Sesame recognised an error had been made and that Mrs M needed to be compensated for this, “I don’t know how it reached the figure of £10,000”.
In terms of the new insurer’s responsibility, the ombudsman said it would have been responsive to reasonable broker requests and Mrs M’s previous claims would not have stopped her from being offered cover.
The insurer has provided the Fos with underwriting evidence that it would not have offered cover to Mrs M, therefore Ms Hurn-Ryan was satisfied that it acted correctly in voiding the policy. “I don’t think it would be appropriate for the complaint against Z to be revisited.”
Ms Hurn-Ryan’s final decision was to uphold the complaint and require Sesame to pay compensation equivalent to the amount Mrs M would have received under her claim, had her policy remained in place, taking into account that part of the repairs were already dealt with by the new insurer.
“If Mrs M and Sesame can’t agree on the amount payable, they should jointly instruct a loss adjuster to give an opinion on this (with the loss adjuster’s fees being covered by Sesame) and both parties will be bound by the loss adjuster’s findings.”
As Mrs M’s premiums for her policy with the new insurer up to the date of loss were deducted from the claim payment she owed, Ms Hurn-Ryan did not think Sesame should deduct any further premium payments from the settlement.
Also, as she took out a loan to fund the repairs, so Ms Hurn-Ryan stated Sesame should cover the interest charged on that loan from the date the loan was taken out to the date of settlement.
Sesame was also told to pay Mrs M further compensation of £1,300 for the distress and inconvenience caused, as well as its poor complaint handling.
Ms Hurn-Ryan also stated Mrs M should be reimbursed the £50 she paid the new insurer to start the claim (upon receipt of evidence of this) and told Sesame to write her a letter confirming the policy voidance on her claims record is the network’s fault.
peter.walker@ft.com
