FSCL Investigates Premium Payment Confusion

When a client gives instructions to cancel a policy, insurers should follow up with the consumer if a further step is needed to complete the matter.

That’s the opinion of dispute resolution service FSCL after the wrong person ended up paying for someone else’s life policy.

Jeremy and Isla were the owners of each other’s life insurance policy, with the premiums for both policies automatically paid from Jeremy’s bank account.

In 2018, the couple’s relationship ended, and Isla asked the insurer to transfer ownership of the policy over her life to her, and she would start paying the premium. The insurer sent a transfer of ownership form to Isla, which she and Jeremy completed.

The insurer then sent Isla a direct debit form, which she did not return. The insurer did not process the transfer of ownership request, and kept taking payments from Jeremy’s bank.

Four years later, Jeremy complained the insurer had failed to carry out the couple’s 2018 instruction and asked for a refund of all the premiums he had paid for Isla’s policy from November 2018 to January 2023.

The insurer offered to refund the premiums from November 2018 to November 2019, an amount of $1,009. Jeremy complained to FSCL.

Following a review of Jeremy’s complaint, the FSCL Ombudsman said that while the insurer accepted they could have contacted Isla in 2018 when she did not return the direct debit form, “…we noted that Jeremy had opportunities to discover the situation much earlier”.

“He did not notice that he was continuing to pay for both policies. Further, he did not review the annual renewal information sent to him over the following four years.”

FSCL suggested Jeremy accept the insurer’s offer of $1,009.