Exchequer Secretary to the Treasury Angela Eagle has called on the FSA and Association of British Insurers to investigate Scottish Provident’s treatment of a cancer victim.
Speaking at an insurance industry regulation debate in Parliament recently, Eagle also said the Financial Ombudsman Service should examine whether it was right to uphold ScotProv’s decision.
The case was brought to Eagle’s attention by Labour MP for Wansbeck Denis Murphy regarding his constituent Susan Hurrell.
Hurrell was told twice that she did not have terminal illness cover under her ScotProv life insurance policy after being diagnosed with ovarian cancer in December 2004.
But in September 2006, after renewing the policy, Hurrell discovered that she did have a terminal-illness clause which meant she would be paid in full as long as she was given less than 12 months to live at diagnosis.
ScotProv admitted its mistake and apologised but said she was not eligible for a payout because she did not die within 12 months of diagnosis.
Hurrell’s doctor wrote to the insurer confirming that her life expectancy at diagnosis was “certainly less than 12 months”.
In Parliament, Murphy said: “Scottish Provident, backed by the ombudsman, is deliberately breaking the rule and spirit of its own policy as nowhere does it state that it must wait and see.”
Eagle said: “I will certainly refer this case to Hector Sants, the FSA’s chief executive. I want to write to the Association of British Insurers’ director general drawing attention to this case. I also wish to contact the Financial Ombudsman Service again so it can check whether it has got everything right in its adjudications so far.”
An FOS spokeswoman says: “Cases like Mrs Hurrell’s are both complex and distressing. They require us to make finely balanced decisions on the information that is before us at the time”
Scottish Provident refused to comment.