Mortgage Protection Policy cancelled but I received no notification

[*]An insurance company will not change the correspondence address on your record. For all they know, you could have been taking out the policy to cover an investment property mortgage.

I'm not suggesting that they would have changed the address by default. I am suggesting that it would have been a good idea for them to ask the question at some stage during the selling process like 'will you be moving house as part of this transaction?'.

[*]It is the customer's responsibility to pay their premium when due in order to ensure cover is continued. Reminders are sent as a courtesy, but they do not change the contractual obligation on the customer to pay the premium on time. In other words, reminders of late premiums are entirely optional.
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I'm just posting these because there's a misconception that if a life insurance company doesn't give you adequate warning, they can't take you off cover. Warnings and reminders are discretionary and are not part of the contract. If you decide to go down the formal complaint route, I suspect that this will be what the reply will be.
I'm sure you are right in terms of the small print, but I have to ask the question - is this fair? is this reasonable? Is it reasonable for a company to make a major financial decision by writing 3 unregistered letters to a 19 year old address, having missed the opportunities to check for a change of address as part of the sales process

That said, I do agree that in 2014, it wouldn't be terribly difficult for Caledonian Life to have a more robust system for dealing with premium collections. How difficult would it be to incorporate a question on an application form "Do you want us to change the address after the policy issues?" and a follow-up procedure thereafter? How difficult would it be to gather e-mail addresses or mobile phone numbers as an alternative or supplementary method of issuing reminders?
Fully agree.
The reason why life companies will seek evidence of health after a policy has gone off risk is to protect themselves from the following scenario: Joe Bloggs has a life insurance policy; he voluntarily cancels it to save a few bob; a year later he gets bad news from a doctor - he's diagnosed with a terminal illness; he goes back to the insurance company and asks if he can revive his old policy that he had cancelled previously.
I wouldn't have a particular problem if they asked 'has your health changed since the payment was missed'. What they actually asked is 'has your health changed in 19 years', which has nothing to do with the missed payment. It is opportunistic and predatory.

  • A copy of late payment notices and lapse warnings will usually be sent to the broker/agent. In this instance, was the agent for the policy Danske themselves?
They've given me the name of the broker on record, which is not a name I recognise at all. I can only assume it was a broker that acted for Danske/NIB at the time. I'm pretty sure I've never had any direct dealing with them.
  • I think you would have a valid complaint against Danske for bouncing the Direct Debit with no valid reason.
You're probably right, unless it turns out that the insurer's direct debit request was not SEPA compliant.

As Liam said, it could have been for an investment property or changing your current cover. Plenty of people take out mortgage protection as their primary life cover plan.
Maybe, though I'd have thought that most of the people taking out cover are taking out residential mortgages - certainly enough of them are taking out residential mortgages to make it worth while asking a question - are you moving house as part of this transaction?

With thousands of customers, it would be too expensive for an insurance company to proactively ensure that the client addresses are up to date.
Absolutely not - if the insurer is going to base major decisions by sending out letters to this address, then they absolutely need to take reasonable steps to keep their database up to date. They didn't do this.

I can't see how you have a case against the insurer in this case. It's the banks fault. See if the insurer will put you back on cover if the bank admit fault to cancelling your DDM without permission. Then go after the bank regardless.
Thanks for the suggestion.

Had it anything to do with SEPA being introduced which caused a lot of D/D payments to get missed. Our cas insurenace was missed due to this but the bank sorted it out for us.

This is a very interesting point. I wonder if the insurer updated their systems to ensure their submission was SEPA compliant? From memory, SEPA issues were the reason quoted by Danske for rejecting the An Post TV Licence charge last November.

Is there any good source of information that can help me understand exactly what the insurer should have submitted and exactly what Danske could/should have sent back?
 
I'm sure you are right in terms of the small print, but I have to ask the question - is this fair? is this reasonable? Is it reasonable for a company to make a major financial decision by writing 3 unregistered letters to a 19 year old address, having missed the opportunities to check for a change of address as part of the sales process.

I do agree that the process could fairly easily be made more robust for giving people warnings before taking them off cover. Although I'm not a property insurance broker, I'm aware that registered letters go out to people before their house insurance is cancelled for non-payment. I think the system is a bit different in that the broker is given responsibility for collection of premiums and, within limits, for when the policy is taken off cover.

Given that the average claim on a life insurance policy is likely to be far greater in size than the average house insurance claim and by definition the circumstances far more serious (I resisted the temptation to use the term "more grave" :)) the life insurance companies could take some pointers from their property insurance counterparts.
 
I wouldn't have a particular problem if they asked 'has your health changed since the payment was missed'. What they actually asked is 'has your health changed in 19 years', which has nothing to do with the missed payment. It is opportunistic and predatory.

I don't think it is. In this particular instance, the policy lapsed through no fault of yours. But from Caledonian Life's perspective, this is what happened: -

  • You started a policy 19 years ago. They asked you all the relevant questions at the time to establish whether you were a standard risk or an increased risk.
  • The basis of the contract is that, one the one side you would pay them every month and on the other side, they would cover you on death, including death due to any illnesses you developed in the meantime.
  • You broke your side of the contract by not paying the premium. (Again - I know this wasn't your fault, but for the moment let's assume it was Danske's.)

In those circumstances, I think it reasonable for the insurer to be allowed to establish if the risk has changed before deciding whether or not they want to allow you back on cover and if so, on what terms.
 
I don't think it is. In this particular instance, the policy lapsed through no fault of yours. But from Caledonian Life's perspective, this is what happened: -

  • You started a policy 19 years ago. They asked you all the relevant questions at the time to establish whether you were a standard risk or an increased risk.
  • The basis of the contract is that, one the one side you would pay them every month and on the other side, they would cover you on death, including death due to any illnesses you developed in the meantime.
  • You broke your side of the contract by not paying the premium. (Again - I know this wasn't your fault, but for the moment let's assume it was Danske's.)

In those circumstances, I think it reasonable for the insurer to be allowed to establish if the risk has changed before deciding whether or not they want to allow you back on cover and if so, on what terms.
To me, this is the absolute definition of opportunistic and predatory. They are using an administrative cock-up, in which they could well share some of the blame, and a 19 year old address as an opportunity to look for more money. They can whistle for it.
I do agree that the process could fairly easily be made more robust for giving people warnings before taking them off cover. Although I'm not a property insurance broker, I'm aware that registered letters go out to people before their house insurance is cancelled for non-payment. I think the system is a bit different in that the broker is given responsibility for collection of premiums and, within limits, for when the policy is taken off cover.

Given that the average claim on a life insurance policy is likely to be far greater in size than the average house insurance claim and by definition the circumstances far more serious (I resisted the temptation to use the term "more grave" :)) the life insurance companies could take some pointers from their property insurance counterparts.

Thanks, this is very interesting. It is strange to see them treating house insurance in a more robust manner than life insurance.
 
To me, this is the absolute definition of opportunistic and predatory. They are using an administrative cock-up, in which they could well share some of the blame, and a 19 year old address as an opportunity to look for more money. They can whistle for it.

Okay let's look at a hypothetical situation...

  • You decided you weren't going to pay the premium in March and didn't, so the policy lapsed.
  • You're currently terminally ill and have only a year at most to live, having been struck with an illness in the past few years.

Should Caledonian Life be obliged to put you back on cover at the same premium, even though the contract was breached?

I hope that neither of the above actually do apply in this case. But the principle is similar - the contract was breached and at the moment we have no proof that Caledonian Life were at fault for the breach. For all they know, you MIGHT be seriously ill.
 
based on the circumstances as presented by the OP there seems to be no valid reasona as to why DB did not pay the direct debit. If the mandate was in order (should be as DD appears to be a regular payment) and funds were in the account, you have a valid claim against DB for any loss incurred. If you have not done this already you need to write to the Bank and ask for an explanation as to why the DD was unpaid. Explain that your Policy has been cancelled as a result of this action and see how they respond.
 
Okay let's look at a hypothetical situation...

  • You decided you weren't going to pay the premium in March and didn't, so the policy lapsed.
  • You're currently terminally ill and have only a year at most to live, having been struck with an illness in the past few years.
Yes, that is a possible hypothetical scenario. My problem is that the insurer has decided that it is the most likely scenario, and is treating me accordingly. It would be a bit like Penneys deciding that because they have a problem with some shoplifters, they are now going to search EVERY customer's bags on the way out. You wouldn't take it from Penneys, and I'm not going to take it from the insurer. There are 100 other more likely scenarios, including administrative error on their own side, but they've gone for my jugular instead.

based on the circumstances as presented by the OP there seems to be no valid reasona as to why DB did not pay the direct debit. If the mandate was in order (should be as DD appears to be a regular payment) and funds were in the account, you have a valid claim against DB for any loss incurred. If you have not done this already you need to write to the Bank and ask for an explanation as to why the DD was unpaid. Explain that your Policy has been cancelled as a result of this action and see how they respond.
Danske have responded to tell me they never got a DD payment request in February, and nothing that SEPA was implemented in February. My own suspicion is that an invalid (non-SEPA) payment request was submitted, and was rejected by Danske long before it hit my account. The insurer then jumped to blame me. They might come to regret that decision.
 
Out of curiosity and I am not saying that it is anyone's fault for not doing it but I do a monthly check of my current account to a) ensure that all direct debits were paid and all money transferred in has arrived and b) to ensure that there weren't any fraudulent transactions. It takes about 20 minutes every month. I thought most people did that but from talking to friends, I think I might be the only one! Anyone else do it especially considering the number of mistakes that we read about on AAM every day?
 
Out of curiosity and I am not saying that it is anyone's fault for not doing it but I do a monthly check of my current account to a) ensure that all direct debits were paid and all money transferred in has arrived and b) to ensure that there weren't any fraudulent transactions. It takes about 20 minutes every month. I thought most people did that but from talking to friends, I think I might be the only one! Anyone else do it especially considering the number of mistakes that we read about on AAM every day?

Sunny ,

My hands are up ! . I every so often take only a cursory glance .
Worse still , I do not trust banks!
Ostrich , comes to mind!
 
Out of curiosity and I am not saying that it is anyone's fault for not doing it but I do a monthly check of my current account to a) ensure that all direct debits were paid and all money transferred in has arrived and b) to ensure that there weren't any fraudulent transactions. It takes about 20 minutes every month. I thought most people did that but from talking to friends, I think I might be the only one! Anyone else do it especially considering the number of mistakes that we read about on AAM every day?

Sunny

We have a household account for all our bills and direct debits. I keep check of all debits that go out of the account for budgeting purposes.

But most people do not keep track at all. When I get a new financial planning client, the longest part of the process is them telling me how much their lifestyle costs because they don't keep track of what they spend their money on. The clients who buy into the financial planning process change that around dramatically.


Steven
www.bluewaterfp.ie
 
Out of curiosity and I am not saying that it is anyone's fault for not doing it but I do a monthly check of my current account to a) ensure that all direct debits were paid and all money transferred in has arrived and b) to ensure that there weren't any fraudulent transactions. It takes about 20 minutes every month. I thought most people did that but from talking to friends, I think I might be the only one! Anyone else do it especially considering the number of mistakes that we read about on AAM every day?

I used to be a bit of a control freak, analysing every credit card transaction by category and creating fancy graphs, till I realised that I didn't do anything with the information arising. I don't really check my accounts any structured way, though I would keep an eye on them through online banking. In my defence, I did notice that the insurance direct debit hadn't made it to my PTSB account.
 
My own suspicion is that an invalid (non-SEPA) payment request was submitted, and was rejected by Danske long before it hit my account. The insurer then jumped to blame me. They might come to regret that decision.

It's interesting to look back on my suspicion. Here's the outcome of my digging around.

I submitted data access requests to both the insurer and Danske. The key finding of these requests was the fact that the insurer changed the format of their payment requests in February for SEPA. And yet, when they got an error code back from AIB (their bank), they immediately assumed that the problem was mine.

The data access request to Danske shows that they never got a payment request in February, so the error was somewhere between the insurer and their bank, AIB. I've emailed the CEO of the insurer today with some constructive suggestions:

1. If you get an error code relating to a payment on the first payment run after a change in the format of the payment file, don’t blame the customer. Blame the payment systems, and get your IT department on the case.

2. If you do have a problem with a customer account, don’t rely on letters to a 19 year old address. Or if you do write to a 19 year old address and you don’t get any response, try sending a registered letter to verify that the person still lives there. Then, start looking for the current address. Hint: It’s on page 2 of the life assurance application form that you have on file.

3. If you sell a product that is frequently linked to a customer moving house, such as a mortgage protection policy, you need to accommodate the likely change of address during the sale process. Try asking your customers on the application form if the address is likely to change, or check back with your customers in the months after selling the policy to get their current address.

4. If you get a notice from a bank about a change in bank account for a lapsed policy, there is a good chance that the customer doesn’t know that it is lapsed. It would be well worth communicating with the customer, possibly through their old or their new bank.
 
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