Discussion about insurers and the Consumer Insurance Act

[unclebulgaria67]

This thread has been created to allow a discussion of industry practice within the insurance industry and also the effect of the Consumer Insurance industry.

The posts here were moved from two threads which were going badly off-topic.

 

 

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I'm sorry to say that the position in the approach outlined in the above two posts is wrong.

 

The situation is the insurance company is not allowed to deny liability where the defect or breach that they are referring to does not materially affect the risk.

 

The failure to provide a copy of the CBT clearly has had no effect on whether or not you would have had the accident. It would be nonsense for them to try and say so.

 

If you didn't have a CBT then this could materially affect the risk because it would mean that you probably weren't qualified to drive and didn't have the knowledge or experience to do so. However, this is not the case here.

 

Therefore in terms of any withdrawal of cover, the insurance company is in breach of contract.

 

Additionally, the insurers are bound by ICOBS. ICOBS requires them to treat you fairly. There is also a very clear requirement in ICOBS that they are not entitled to withdraw, simply because of some administrative defect or failing – such as you failing to notify the insurer of a loss within 24 hours or 48 hours or some other stimulated time in terms and conditions, or such as you failing to provide them with a copy of the CBT – assuming that there was a valid one in force at the time – and we understand from you that there.

 

We don't know how this policy was purchased. Perhaps it was done online and it was clear the CBT had to be sent in within say 14 days. The letter enclosing the policy documents may have also reminded them of the need to send a copy of the CBT.

 

The policy may have been cancelled with letter or email sent advising of this, before the accident.

 

The Insurance contract relied on the CBT and proof being sent. In the absence of the CBT being received, they were entitled to cancel the contract and issue notice of this.

 

The OP appears to admit to not sending the CBT to the Insurers. Therefore before threatening Insurers with a court claim, it is important to find out whether they asked for it. Hence suggesting a written complaint and getting hold of the information.

Edited January 15, 2016 by BankFodder
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[BankFodder]

We don't know how this policy was purchased. Perhaps it was done online and it was clear the CBT had to be sent in within say 14 days. The letter enclosing the policy documents may have also reminded them of the need to send a copy of the CBT.

 

The policy may have been cancelled with letter or email sent advising of this, before the accident.

 

The Insurance contract relied on the CBT and proof being sent. In the absence of the CBT being received, they were entitled to cancel the contract and issue notice of this.

 

The OP appears to admit to not sending the CBT to the Insurers. Therefore before threatening Insurers with a court claim, it is important to find out whether they asked for it. Hence suggesting a written complaint and getting hold of the information.

 

Sorry, but none of this affects my answer above.

 

The insurance industry is statutorily bound by regulations made under the Financial Service and Markets Act 2000.

 

The only stumbling block is that it needs somebody with a bit of bottle to enforce it – and the Financial Services Ombudsman is not that person.

[unclebulgaria67]

Sorry, but none of this affects my answer above.

 

The insurance industry is statutorily bound by regulations made under the Financial Service and Markets Act 2000.

 

The only stumbling block is that it needs somebody with a bit of bottle to enforce it – and the Financial Services Ombudsman is not that person.

 

The OP will have to get the Insurers side of the story, before they took this further. Jumping the gun, advising that the courts may be the answer.

 

Perhaps the OP has made a mistake and not read what was sent to them.

[BankFodder]

Have you read the rules in ICOBS?

[unclebulgaria67]

Have you read the rules in ICOBS?

 

Yes. I just don't have your level of confidence in dealing with this in the way you suggested.

[BankFodder]

I appreciate that, but the rules are very clear and they are statutorily binding.

 

Not only that, ICOBS makes it clear that insurance contracts are not only subject to the FCA rules but they also subject To the Unfair Terms in Consumer Contracts Regulations – now contained in the consumer rights act.

 

Also, the issue of denying insurance liability being only justifiable in the presence of some fact which materially affects the risk is a common law principle going back a long way – and now reinforced in the FCA regulations.

 

The outcome of this problem will hinge entirely on the way that the OP is prepared to deal with it.

[unclebulgaria67]

The key question is whether Insurers have a right to cancel insurance, if documents requested which affect risk, are not received ?

 

The answer surely is yes.

 

Once Insurers have decided to cancel insurance due to non receipt of documents, they have to send the policyholder notice of cancellation, giving a minimum period of 7 days.

 

The next question is whether the Insurers have any legal duty to reinstate Insurance, once they are provided with the missing documents. I have not seen anything, which requires Insurers to reinstate Insurance. Because of the Road Traffic Act and third party cover being a legal requirement, the Insurers are not really allowed to backdate Insurance. If a mistake had been made that the CBT had not been requested, then the Insurers could remedy the situation by reinstating the policy and not technically backdating the insurance. The Insurers would not routinely reinstate Insurance, without good reason.

[BankFodder]

The key question is whether Insurers have a right to cancel insurance, if documents requested which affect risk, are not received ?

 

The answer surely is yes.

 

Once Insurers have decided to cancel insurance due to non receipt of documents, they have to send the policyholder notice of cancellation, giving a minimum period of 7 days.

 

The next question is whether the Insurers have any legal duty to reinstate Insurance, once they are provided with the missing documents. I have not seen anything, which requires Insurers to reinstate Insurance. Because of the Road Traffic Act and third party cover being a legal requirement, the Insurers are not really allowed to backdate Insurance. If a mistake had been made that the CBT had not been requested, then the Insurers could remedy the situation by reinstating the policy and not technically backdating the insurance. The Insurers would not routinely reinstate Insurance, without good reason.

 

Please will you provide links to authorities to support what you say here.

 

Thank you

[unclebulgaria67]

Non receipt of documents requested would be a simple contract issue and not complying with disclosure required by the Insurers. The insurance contract covers Insurers right to cancel the policy. iCOBS covers 7 day notice of cancellation.

 

Re issuing of Insurance certificate and legal issues, this is i believe from memory covered by S 174 of RTA, which you can look up.

[BankFodder]

Non receipt of documents requested would be a simple contract issue and not complying with disclosure required by the Insurers. The insurance contract covers Insurers right to cancel the policy. iCOBS covers 7 day notice of cancellation.

 

Re issuing of Insurance certificate and legal issues, this is i believe from memory covered by S 174 of RTA, which you can look up.

 

Sorry but you are wrong.

[unclebulgaria67]

Sorry but you are wrong.

 

Can you supply evidence to support your statement ?

 

I believe i am correct that insurers can cancel insurance giving 7 days notice, if the document requested is not received. It is a condition of the Insurance contract being offered, that x document is supplied. The contract of insurance allows Insurers to cancel, giving 7 days notice. The cancellation is also notified to MID, hence the Police seeing that Insurance was not in force.

 

If you do your research, you will find a number of articles regarding legality of backdating insurance, where a policy has been cancelled. Now this is not straightforward, due to the way the RTA is written.

 

Link to recent Cii article on changes to Insurance legislation.

 

http://www.cii.co.uk/media/6632643/p94_bulletin_nov_2015.pdf

[BankFodder]

Thank you.

 

I think that we have both made our position clear.

 

I am now going to clean up this thread so that if and when the OP gets back, I can attend to the business of helping him sort out his problem.

[unclebulgaria67]

If you check Motorcycle Insurers such as Bennetts, they tell you that you must send in a copy of your CBT within 30 days or the policy will be cancelled.

 

It is the same as any other insurance contract situation. If you don't send in the documents requested within the time allowed, the Insurers will cancel the policy giving 7 days notice. The cancellation is then advised to MID.

 

The OP has also posted to MSE, but has also not returned to provide any more information, that might help us provide more assistance.

 

In regard to liability for the accident and insurance situation, not sure we have enough information. Some of these issues are covered within this Cii update.

 

http://www.cii.co.uk/media/6632643/p94_bulletin_nov_2015.pdf

[unclebulgaria67]

Bankfodder.

 

If you really believe you are correct in what you have stated, why don't you contact the ABI. They are normally very helpful in clarifying these types of situation, particularly for online forums and media.

 

If you do find out that what i have stated is correct, perhaps you will add an update !

[unclebulgaria67]

Agree totally with bank fodder. The insurance company is totally in the wrong if as you state you have cbt.

 

As i have stated but had posts deleted, it is common practice for Insurers to cancel, if they don't receive documents they requested. They send an email or letter giving 7 days notice of cancellation.

 

Up to the OP to find out, if the Insurers have made an error.

 

Will leave it at that.

[BankFodder]

 

If you discover Markerstudy would have insured you had the correct information been declared but at a higher premium and / or with other terms applied to the Policy then they're obliged to deal with the claim subject to you paying the extra and / the terms being applied or they can adjust the total loss payment accordingly.

 

 

I doubt very much whether this is correct.

 

This is a bit like a punter going back to the betting shop after the horse has won and asking the betting shop to change the either-way bet to a to-win bet.

 

I don't expect at all that anybody could oblige an insurer to accept a premium retrospectively in order to cover a peril which has already occurred.

 

You might be more familiar with the same principle when you talk about "pre-existing conditions".

[unclebulgaria67]

I doubt very much whether this is correct.

 

This is a bit like a punter going back to the betting shop after the horse has won and asking the betting shop to change the either-way bet to a to-win bet.

 

I don't expect at all that anybody could oblige an insurer to accept a premium retrospectively in order to cover a peril which has already occurred.

 

You might be more familiar with the same principle when you talk about "pre-existing conditions".

 

dacouc is correct. I have dealt with such cases, where we have agreed to deal with claims, subject to relevant premiums being paid, where there has been some incorrect information disclosed. It is pretty unusual, but underwriters do allow it on occasions.

 

If you look on the FOS site, on the non disclosure policy page i believe, it mentons this Insurers option in dealing with inadvertent non disclosure cases.

 

You might get a case for example, where an old lady declares having one accidental damage claim within say the last 3 years. Then they come to claim and another claim is found. If the Insurers underwriting guideline says they would insure this lady with 2 claims in 3 years, but it would cost say an extra £50 premium, then the Insurers have the option of accepting the non disclosure, paying the new claim, subject to the extra premium of £50 being paid. This is correct, as the lady is in the same position premium wise, as she would have, had she correctly disclosed both claim at inception of the policy.

[BankFodder]

Well that is good then.

An example of insurers doing what they aren't obliged to do by law - as opposed to them doing what they are not entitled to do.

It is clearly something which they are undertaking voluntarily or as in compliance with some industry code.

[unclebulgaria67]

Well that is good then.

An example of insurers doing what they aren't obliged to do by law - as opposed to them doing what they are not entitled to do.

It is clearly something which they are undertaking voluntarily or as in compliance with some industry code.

 

Has been a general practice of UK Insurers for a very long time. The FOS have accepted it as standard practice.

 

It also is quite useful to Insurers when they are accepting risks via parties acting for the Policyholders. I have dealt with people (VIP's) who use agents or account managers to handle their Insurance arrangements. Sometimes it turns out that not all information provided turned out to be accurate. You then get a claim made, where the risk is different to what was advised originally. Having some flexibility in dealing with the underwriting after the event is extremely useful. You would be quite surprised at how some people with loads of money or who are too important for dealing with Insurance, are really so relaxed, that they can't be bothered to provide full or accurate information.

[dacouc]

I doubt very much whether this is correct.

 

This is a bit like a punter going back to the betting shop after the horse has won and asking the betting shop to change the either-way bet to a to-win bet.

 

I don't expect at all that anybody could oblige an insurer to accept a premium retrospectively in order to cover a peril which has already occurred.

 

You might be more familiar with the same principle when you talk about "pre-existing conditions".

 

Could I recommend you read the Consumer Insurance Act, it's been in place nearly three years.

[BankFodder]

Thank you. I'll have a look

 

What section do you have in mind?

[dacouc]

It's a very powerful piece of legislation which is very slanted towards the consumer, well worth reading all of it

 

Brief overview here https://www.abi.org.uk/Insurance-and-savings/Tools-and-resources/How-to-buy-insurance/What-the-Consumer-Insurance-Act-means-for-customers

[BankFodder]

Thank you but as you have read the act, please direct me to the source section so I can understand where I have gone wrong

[dacouc]

Thank you but as you have read the act, please direct me to the source section so I can understand where I have gone wrong

 

It's not a very long piece of legislation but the main relevant parts to the my post you said was incorrect are 4 & 5

 

http://www.legislation.gov.uk/ukpga/2012/6/contents/enacted

[BankFodder]

Thank you.

 

I am sure you are trying to be helpful but I haven't seen anything in the sections you indicated - or in the schedule that they refer to which supports your position

 

If you discover Markerstudy would have insured you had the correct information been declared but at a higher premium and / or with other terms applied to the Policy then they're obliged to deal with the claim subject to you paying the extra and / the terms being applied or they can adjust the total loss payment accordingly. Again providing they were not miss led.

I am sure that I must have missed something. Maybe you can quote the actual words you are relying upon and link back to the source.

 

Thanks