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Insurance company plays hard to get


Perry ran a small specialty shop. He had a number of insurance policies for his shop placed by his broker, Yummy Insurance. In 2015, Perry decided to cancel a few of the policies and sought a refund for the premiums (about $1400).

In April 2015, Yummy Insurance sent Perry a statement outlining his policies, payments and the refunds due. Perry noticed the statement showed he owed Yummy Insurance $3,600 for a commercial motor fleet policy he did not know he had taken out. Perry did not have a commercial motor fleet for his shop. Because of the outstanding amount of $3,600, Yummy Insurance said that Perry would not be refunded any premiums.

Perry also had another business importing motorcycles from overseas. Perry said he discussed getting commercial motor fleet insurance with Yummy Insurance for the motorcycle business, but not for his shop. However, Perry said this was only an informal discussion and he never:

  • received any documentation for the commercial motor fleet policy, or
  • confirmed he wanted to take out a commercial motor fleet policy.


The complaint

Perry complained to Yummy Insurance that he was unaware of the commercial motor fleet policy and was unwilling to pay the outstanding premium of $3,600. Perry wanted the commercial motor fleet policy cancelled and the premium refund of $1,400 paid to him. Yummy Insurance did not agree to cancel the policy and continued to seek the $3,600 from Perry.


FSCL steps in

We asked Yummy Insurance for a report on the complaint, but despite consistent prompting, Yummy Insurance did not provide a report.

We issued a preliminary view that the complaint should be upheld because Yummy Insurance had not provided any evidence that Perry knew about the commercial fleet policy being placed. We were also of the view that Yummy Insurance should pay Perry an extra $250 for the inconvenience caused by its lack of communication.


Yummy Insurance speaks up

After some delay Yummy Insurance responded to the preliminary view and said that Perry did arrange the commercial motor fleet policy. We asked for evidence of this policy being taken out but again received nothing back. Finally after more delay, we issued a formal recommendation.


The final say

We found that Yummy Insurance had not proved Perry took out the commercial motor fleet policy. Without any evidence to rebut Perry’s position, we found that Yummy Insurance placed the commercial motor fleet policy without Perry’s knowledge or consent.

We said that Yummy Insurance had to cancel the commercial motor fleet policy and pay Perry his refund of $1,400 and $250 for the inconvenience caused (a total of $1,650).

Perry accepted our decision, and, after further delay, Yummy Insurance finally paid Perry.


The lesson

It is best to acknowledge a complaint and take action as soon as possible. Ignoring a complaint will not make it go away, and can often aggravate the situation. If Yummy Insurance had not paid Perry the recommended sum , Yummy Insurance ran the risk of  being de-registered from the Financial Service Providers Register), meaning Yummy Insurance would no longer have been able to provide financial services in New Zealand. It is important for financial service providers to respond promptly and professionally to complaints.