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Friends Life forced to pay £100k claim

Nic Hughes
Nic Hughes died in October 2011

The Financial Ombudsman Service has ruled against Friends Life after the insurer refused to pay out on a life and critical illness policy for a father who died of cancer.

Nic Hughes died in October 2011 after being diagnosed with cancer of the gall bladder and secondary tumours.

He notified Friends the previous January that he intended to claim on his and his wife’s joint policy, which would be worth in excess of £100,000.

At the time of applying for the life and critical illness policy in 2009, he had been suffering from an inflammatory bowel condition which he disclosed in the application.

But Friends Life refused to pay out because it said Hughes had failed to answer two questions correctly, concerning whether he had numbness or tingling in his face and limbs and whether he had ever been asked to reduce his alcohol intake for medical reasons.

A letter from Friends said: “The recent symptoms of numbness, loss of feeling and tingling sensations recorded in your medical records, together with the abnormal liver function tests you had, could have indicated the onset of a number of serious medical conditions. If they had known about them, our underwriters would not have been able to offer you cover for at least 12 months.”

The Telegraph reports over 60,000 people signed a petition asking the insurer to pay out while Mr Hughes’ widow took the case to the FOS which has ruled Friends was wrong not to pay out on the policy.

Friends has agree to pay out on the £100,000 policy in full, plus interest.

A Friends spokesman says: “We committed to abide by the FOS’s decision and, while we continue to have concerns about this case, we are sympathetic to the circumstances of Mr Hughes’ family and believe it would be unfair to prolong the claim process any further.

“Therefore, rather than refer this case to a senior Ombudsman for review, we are making a payment to the family for the full value of the claim, plus interest. This is in addition to the ex-gratia payment already made.

 “Friends Life follows the Association of British Insurers Code on Non-disclosure and Treating Customers Fairly, and believes it is compliant with the new legislation which has recently come into force.”

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Comments

There are 5 comments at the moment, we would love to hear your opinion too.

  1. Pity they had to be dragged screaming to this decision. It really does not reflect well on them. But then what would you expect from a firm owned by a Vulture Company?

  2. This case has troubled me. Firstly because it has cast serious doubt of Friends Life’s underwriting and claims processes. Secondly the case was pushed to this conclusion by concerned friends who used the power of social media and traditional media very effectively, but seemed to bypass the “normal” route of going straight to the ombudsman. Thirdly, the way this is reported, suggests that Friends Life believe that they have a valid case for non-payment, but have paid due to a desire for “goodwill”. My understanding is that the Ombudsman ruled in favour of the client. What is appalling is the length of time that this case took to conclude – where a family are reliant upon such benefits, it would make much more sense to fast-track this sort of claim through. Finally, there are a number of precedents being established here, which aren’t helpful to anyone. Despite the claim being paid, Friends Life have had a lot of PR damage on this one. It would seem that the Ombudsman agreed with the client, yet this still seems to suggest that there is some doubt about the claim – we could all do with rather more clarity. Non-disclosure is a real issue, but expecting clients to be medical experts about themselves is rather silly. If in any doubt, the insurer should have insisted on further medical information (presumably). This case has done very little to help build trust with the public and if anything has played to the suggestion that the “little guy is being ripped off, and can only get fairness if there is big public support and protest”. One would hope that this campaign could have been avoided, that reasonable actions could have been taken – Providers and advisers need to learn some lessons from this – particularly about the power of social media, but more importantly being fair. I haven’t yet seen any information about how this policy was bought/sold and if there was any adviser involved, which is also a further issue.

  3. Not sure how i feel about this………………

    I’m glad that the family has had some form of settlement, i completely sympathise with their terrible situation but i think some questions need to be asked about the descision to find against Friends Life.
    If someone applies for protection of any kind and doesn’t answer the health questions correctly then they run the risk of having the policy pay out. If they can then take the insurance company to the FOS and they are forced to pay out it makes a mockery of the application process.

    This article doesn’t give enough facts to say if Friends Life were in the wrong and i would hate to deny any family the means to continue their lifestyle but Friends Life’s response to the claim seems to have been the correct response after checking medical records.

    Judgments like this, although a victory for 1 family, will result in higher prices for everyone.

    Just my opinion, feel free to disagree.

  4. As an ifa i will think twice before using them

  5. Peter Heffernan 29th April 2013 at 3:56 pm

    This might seem a tad arrogant but I have for over 36 years regarded myself as the first underwriter for which ever life company I was dealing with. I have suggested to all of my clients that they should include everything from a major illness to a boil on the bum, that way I sleep at night!

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