Diagnosed with cancer? Burgled in the night?
In such awful circumstances, you would hope your insurance company would settle your claim swiftly. Don’t bet on it.
At Money Mail we have been inundated with your stories of insurers wriggling out of paying claims. Lauren Thompson investigates.
'Our son's illness should be covered'
Dan and Alissa Ellis, from East Sussex, have been given the heartbreaking news that their four-year-old son Arthur has Duchenne Muscular Dystrophy.
This is a type of muscle degeneration that results in difficulty walking and breathing, making it likely Arthur will be wheelchair-bound by the age of ten.
The couple, pictured with Arthur and their other children Poppy, ten, Hector, nine, and six-year-old Lola, have been paying Scottish Provident £160 a month since 2005 for a critical illness policy.
This is supposed to pay out £20,000 if any of their children suffer a permanent and total disability, which Arthur’s case is. But the insurer has refused to pay up.
On page 26 of the Ellis’s policy small print, it states: ‘We will not pay a claim caused by a congenital defect’ — meaning one that was present from birth.
Arthur was diagnosed only in January 2011, when he was three years old. His condition was not apparent at birth. But Scottish Provident has told both the Ellis family and Money Mail that because Duchenne Muscular Dystrophy ‘has a genetic cause, it is unfortunately excluded from the cover’.
Harsh treatment by insurers despite hiked premiums
Insurers are raking in millions of pounds in profits. But while shareholders are cashing in, policyholders are being hung out to dry. Complaints about insurers are soaring as increasing numbers of honest customers find their claims are being rejected. Since highlighting this purge on claims, Money Mail has been flooded with your stories about claims that have been refused.
Many of you feel unfairly treated by insurers whose cover you have paid hundreds of pounds for over many years. Yet while your claims are refused, insurers make bigger profits and are hiking your premiums.
Admiral, for example, made £160.6million in the first six months of this year, 27 per cent more than in 2010. As a result, its shareholders have received a healthy dividend of 8.4 per cent.
Aviva made £242 million profit on general insurance, up 6 per cent on last year. Its shareholders will draw an 8.4 per cent dividend. Meanwhile, the average annual comprehensive car insurance premium rose by a staggering 40 per cent between March 2010 and March 2011 and is now £1,449 a year.
Home insurance has also hit a record high, having increased by 14.3 per cent in the past year to £290, according to the AA. Despite hiking premiums, firms are desperate to make more money from policies. On car insurance alone insurers paid out £1.24 in claims for every £1 they took in premiums in 2010, according to analysts Towers Watson.
Part of this loss is due to fraud. In 2010 insurers uncovered 133,000 fraudulent insurance claims worth £919 million — that is 2,500 every week — up 9 per cent on 2009. As a result, firms are getting tough when analysing claims, with many relying on small print and tiny details to ensure they don’t pay out.
A rising tide of complaints on insurance
While insurers squeeze households more tightly, the Financial Ombudsman Service, which settles disputes between consumers and insurers, has seen an increase in the number of complaints.
Last year, it received 20,978 complaints about general insurance (excluding payment protection insurance), 6 per cent up on the previous year.
In one of the most shocking cases, an elderly couple were refused a payout from their home insurer after they had been burgled. The couple were asleep when thieves broke in during the night and attacked them. After stealing several items, the raiders used the couple’s front door keys to unlock the door and let themselves out.
Astonishingly, the insurer rejected the claim because the small print read that a ‘forcible entrance and exit’ had to have occurred. The Ombudsman would not name the insurer, but ordered it to pay up immediately.
In another case, an elderly passenger on a cruise ship fell ill with breathing difficulties. She rang her travel insurer, who promised she would be covered for her £6,500 medical expenses while abroad.
But, once home, the insurer turned down her claim, saying her breathing problems were related to a pre-existing condition.
The Ombudsman discovered that not only had the customer told the insurer about her medical history, she had even paid more to ensure these pre-existing conditions were covered. The Ombudsman forced the insurer to pay the claim, and compensate the customer £500 for the distress it had caused.
'Insurer ignored my vet's advice'
Tracy and Keith Thompson have been forced to pay £500 in vet bills because their pet insurer, Direct Line, has refused to pay out.
The couple, pictured with daughter Eve, 11, got their beloved labrador Pepsi, now six, from a rescue centre when she was seven months old. They have been paying £16 a month for pet insurance in the belief they would be covered should anything happen to her.
Last year, Pepsi suffered a haematoma, which is similar to a blood blister, on her ear and needed £500 worth of surgery at their vet in Gosforth, Newcastle upon Tyne. However, Direct Line says the haematoma was linked to a previous seasonal allergy and it won’t cover the cost of the surgery.
Pepsi was diagnosed as having the allergy in June 2008 after the Thompsons saw her scratching her ears. As Pepsi’s allergy happened more than three years ago, anything that can be linked to it will not be covered.
Mrs Thompson, 42, a retail manager, says: ‘We feel really let down by Direct Line. ‘They have totally disregarded what our vet said and instead reached their own conclusions about what caused Pepsi’s illness.’
Your battles for paymentA reader from Kent bought home emergency cover and five days later his lavatory cistern broke, creating a flooding risk. His insurer told him he was unable to claim on his policy because he was still within the 14-day cooling-off period. Instead, he had to pay £96 to get it fixed.
Grandparents from Newport, Gwent, had to cancel their timeshare holiday after their grandson was diagnosed with cancer. But their insurer refused to pay up because its small print excludes ‘timeshare maintenance fees’ — even though the cost of their holiday is not counted as a maintenance fee.
Another reader from Lytham St Anne’s, Lancs, was on holiday in New York when he was robbed at gunpoint by two attackers in broad daylight, yards from his Manhattan hotel. His insurer refused to pay out because it said the policyholder had not acted with reasonable care.
Another reader from Sheffield lost her late mother’s ring at the gym in March. She provided the insurer with CCTV footage of her wearing the ring on the day in question. But she has not heard anything from her insurer since May.
We receive scores of letters, phone calls and emails every week from people who experience unacceptable delays when claiming, with many victims of crime subjected to lengthy, and even aggressive, questioning by insurance companies to see if they are telling the truth.
The Ombudsman upholds more than two in every three complaints made about insurer Hastings — more than any other company. But consumers’ claims were also upheld 61 per cent of the time against giant bank Lloyds TSB, 60 per cent of the time against Bupa and 59 per cent of the time against Axa.
IS ANYTHING BEING DONE?
The situation has forced the Government to step in, with new laws currently going through the House of Lords.
The Consumer Insurance (Disclosure and Representations) Bill aims to stop insurers refusing to pay up because the customer was never asked the right questions when they bought the policy.
It will shift the emphasis away from a customer’s duty to disclose all necessary information, and instead force insurers to ask specific questions.
For example, instead of asking whether someone is a non-smoker, it should ask specifically when they last smoked. The new rules, which should become law in 2013, will be particularly useful for people who might forget to reveal particular health conditions when taking out a medical or travel policy.
But campaigners say the Bill will not be enough to tackle the industry’s problems. A major issue is that insurers use vague terms, and send out pages of small print, so they can interpret the rules in whichever way they choose.
As an example, a policy may state someone has to take ‘reasonable care’ to protect their belongings — but what this means is open to interpretation.
James Daley, editor of Which? Money, says: ‘Insurers are very happy to take your premiums, but they make it as difficult as possible to make a claim. This is not fair.
‘If insurers do have exclusions, these need to be spelt out to people at the point of sale, not years later when they come to claim.’
WHAT THE INSURERS SAY
Trade body the Association of British Insurers acknowledges that fraud is a huge issue for companies.
Nick Starling, director-general at the Association of British Insurers, says: ‘Every year insurers help millions of people recover financially when the worst happens. But we also need to protect honest customers from fraudulent claimants, who push up the cost of insurance.
‘So insurers strive to strike the right balance between paying genuine claims as quickly as possible, and weeding out the cheats.’
'I'm fighting cancer but Saga won't pay'
John Mellor was devastated when doctors told him he had throat cancer. But he has received no help from insurer Saga, which has refused to reimburse him £1,000 to cover the cost of a holiday he was forced to cancel.
Mr Mellor, 60, and his wife Belinda had planned to go to Marbella, Spain, with their family. Saga argues that because Mr Mellor went to the doctor four days before booking the holiday his claim is invalid, as he should have told the company he was waiting for test results.
‘I called Saga before we were due to leave and they assured me the claim would be paid. Now they have wriggled out of it,’ says Mrs Mellor, 59, from Matlock, Derbyshire.
A Saga spokesman said he ‘sympathised’ with the Mellors, but turning down the claim was ‘a relatively straightforward matter’.
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