Name and Shame Rogue Insurers Who Fail to Pay Up ; Watchdog Forces Companies to Fork Out 400,000 for Refusing Valid

By SANDRA MURPHY

THE FINANCIAL watchdog has forced insurance companies to make payouts of nearly 400,000 over their refusal to handle perfectly valid customer claims.

Ombudsman Joe Meade was scathing in his criticism of the firms' conduct, saying that one insurer's behaviour was 'totally incorrect and highly insensitive'.

Another firm was ordered to pay up to 165,000 in life insurance it had withheld, as it disputed whether the person covered had died of a heart attack, while a third was told to hand over more than E200,000 to a rugby player whose career was ended by a knee injury.

Despite his tough stance, however, there was criticism last night that Mr Meade had failed to 'name and shame' the companies responsible.

'There is no reason why these financial institutions should not be named,' said Fine Gael finance spokesman Richard Bruton.

'If a bank or insurance company is known to have done something, they will be less likely to do it again.

It will also give them the encouragement to get it right next time.' Overall, complaints to the Financial Services Ombudsman were up by almost a third on last year's six monthly figures, with banking and insurance firms made to pay out more than 800,000 in claims and compensation.

Of the 2,100 complaints to the Ombudsman's office by June, the majority 1,200 related to insurance.

The remaining 900 related to credit institutions.

The report details how the Ombudsman instructed one insurance company to pay a 165,000 claim on a health insurance policy after a man's death.

The company had disputed the man's death from a heart attack under the terms of a specified illness cover policy.

In another case, a rugby player was awarded more than E200,000 after an insurance company refused to pay out on a policy that covered the end of his career through injury.

The player sustained a knee injury in 2000 and was unable to continue his professional career.

But the insurance company had originally refused to pay out on a policy held by the IRFU, claiming the man had continued to play amateur rugby and had failed to notify the company of the injury for four years.

The Ombudsman directed the company to pay the full benefit of the claim, a figure of 190,461.

He also directed the company to pay the complainant another 10,000 in compensation for the distress and expenses sustained.

Furthermore, the Ombudsman directed the company and the IRFU to enter into urgent negotiations to ensure proper notification systems were in place within three months from the date of this April 2007 decision.

The parents of a dead tourist received compensation after an Irish-based travel insurance company refused to pay for the cost of repatriating the body.

The company said it was not responsible for any claims that were related to being 'under the influence of alcohol'. But Mr Meade found the company had acted incorrectly and its handling of the claim was highly insensitive.

'The nature and gravity of the allegation being made i.e. that the insured's death arose as a result of the insured 'being under the influence of alcohol' must be taken into account and regard must be had to the effects such a determination would have on the insured's family.

'[I] found the company's handling, assessment and repudiation of the claim totally incorrect and highly insensitive to say the least.' He directed the company to pay the total repatriation expenses incurred of stg3,396 (5,031) to the funeral assistance company, plus any interest that may have accrued on the debt.

He also directed that the company pay the complainants stg500 (741) for distress caused.

In another case, an unsuitable 10,000 insurance investment product sold to an unemployed single mother of two young children, led the Ombudsman to question the sales practices of the firm concerned.

Insurance has been one of the fastest-growing financial markets in Ireland since the sector was deregulated. However, there are fears that greater competition will also lead firms to be more aggressive in trying to minimise claims.

A Garda inquiry is currently under way into allegations that serving officers helped car insurance firms, including Quinn Direct, reduce the cost of claims. The accusations are flatly denied by the firm.

Warning customers to read the small print before signing insurance policies, Labour party spokesman Joan Burton hit out at 'aggressive insurance companies' who preyed on vulnerable members of the public.

'Some insurance firms are aggressively tackling fraudulent claims which are correct.

'It is the people taking out policies who are being dealt with in an overly aggressive manner and losing out in their entitlements.'

OMBUDSMAN SLAMS BROKERS

THE Ombudsman has instructed three mortgage brokers to pay out a total of 61,000 after giving poor investment advice to clients.

The payouts arose from problems with mortgage protection insurance.

Other cases highlighted included the sale of unsuitable insurance products to low income families.

Mr Meade said he was also concerned about the property investment advice given by some mortgage brokers. 'Some brokers are giving advice in a personal capacity, while others have had a conflict of interest.

'There is alas confusion as to the objectivity of the financial advice being given.

'In the three cases so far decided by the Ombudsman, significant issues regarding independent financial advice and conflict of interest have arisen.'

(c) 2007 Daily Mail; London (UK). Provided by ProQuest Information and Learning. All rights Reserved.