Insurers told to pay out pounds 7m
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Your support makes all the difference.INSURANCE companies were told to pay out nearly pounds 7.5 million to dissatisfied customers last year, the insurance ombudsman's report said yesterday.
The ombudsman's awards came as the number of complaints to his office in 1993 increased by 46 per cent from the previous year.
The ombudsman, Julian Farrand, said he had completed inquiries into 6,344 cases last year, compared with 4,476 in 1992. He had ruled in favour of policyholders in a third of completed cases, awarding payments ranging between pounds 230,000 and pounds 3.88. Individual cases are not described in the report.
But Dr Farrand said it would be unfair to suggest that consumers were unhappy with insurance companies. 'That would be to take too simplistic a view,' he said. Given the size of the industry, the number of complaints was very small, he said. He added that there were serious concerns about the voluntary code of practice promoted by the Association of British Insurers, the industry's trade body.
The most common complaints that fell within the ambit of the code were the failure of brokers to disclose exclusions to travel insurance policies they sell.
More serious was the area of loan protection insurance, Dr Farrand said. 'This type of cover is often sold to them by inertia, such as where they fail to tick a box in a loan application form to say they do not want it. When they come to claim, they find that they are not covered.'
Dr Farrand said about two-thirds of the 1,500 life assurance-related complaints made last year related to home income schemes, where elderly homeowners were persuaded to take out extra mortgages and use the money to buy investment bonds.
The bonds were supposed to pay an income and the mortgage. The schemes failed when mortgage rates rose but the value of investments fell. The average compensation paid out was pounds 55,000, with a further pounds 1,500 for injury to feelings.
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