Over the years, Chelsea had arranged a number of different insurance policies, including critical illness, sickness, disability and accident hospital benefits, for herself and her extended family. In 2016 Chelsea and her family had over 100 different policies with the insurer. In February Chelsea wrote to the insurer requesting that 50 of the policies, relating to half the family, be cancelled.
Chelsea said she sent another letter in February, requesting that the remaining policies, for the other half of the family, be cancelled as well. The insurer never received the second letter.
When the insurer received the first letter, it responded to Chelsea, requesting signatures from the family members whose policies were being cancelled. Once the signatures were received, the insurer confirmed, in March 2016, that those 50 policies had been cancelled.
In December 2016, Chelsea received a renewal notice for the remaining policies. Chelsea was confused and called the insurer asking why she had received the renewal notice, because she believed all the policies had been cancelled. The insurer said it told Chelsea what it needed to cancel the remaining policies, but did not hear again from Chelsea.
In May 2018, Chelsea’s accountant wrote to the insurer, advising that Chelsea had sent the second letter in February 2016, cancelling the remaining policies. The accountant asked the insurer to refund $50,000 worth of premiums that had been paid since the February 2016 letter. The insurer said it had not received any notice to cancel the remaining policies until the accountant’s letter in May 2018, and that it would not be refunding any of the premiums.
Chelsea complained to FSCL.
Dispute
Chelsea believed she was entitled to a refund of $50,000 for the premiums that had been paid since she had sent the second cancellation letter in 2016. Chelsea said that the insurer had been negligent in not cancelling those policies.
The insurer said that:
- it had actioned the requested cancellation of 50 policies in 2016, but it had not received any other request for cancellation until May 2018.
- it could not be liable for any failure of the postal service, which might have resulted in the second letter never arriving.
- Chelsea should have been aware that the policies had not been cancelled, because premiums continued to be deducted from her bank account for the two years after 2016. This should have been apparent in Chelsea’s annual accounting and tax returns.
- Chelsea should have been aware that the second batch of policies had not been cancelled, because the insurer had never requested authority from the other half of the family to cancel those policies, which it had done before it cancelled the first 50 policies.
- In the phone call in December 2016, Chelsea had alluded to the cancellation of all of her policies, but did not specifically refer to any policies belonging to specific family members. The insurer did acknowledge that it was odd that this conversation had not been followed up on, until the accountant’s letter in 2018.
Review
We recommended that Chelsea discontinue her compliant for the following reasons:
- The insurer’s letter, in response to the 2016 request for cancellation, only referred to cancelling half the policies. We accepted that the insurer had never received the second letter requesting that the other half of the policies be cancelled. The insurer could not be held liable for not actioning the cancellation.
- The insurer sent renewal letters to Chelsea, and Chelsea should have realised the policies were still in place.
- The phone calls between Chelsea and the insurer from December 2016 should have put Chelsea on notice that the policies were still in place. In the phone calls, the insurer checked with Chelsea whether she wanted her and her family’s policies to be cancelled, and advised that if she did, it required those family members’ signatures. However, Chelsea responded to this question by asking the insurer to hold off on any cancellations, including the cancellation of her own policies.
Resolution
Chelsea accepted the recommendation, chose to withdraw her complaint and to move on.
Insights for consumers
It is important that consumers ensure that correspondence, such as a request for cancellation, have been received and actioned. Sometimes the postal system is unreliable, and consumers need to do their due diligence to check that correspondence has been received. It is also important that consumers check their bank statements from time to time, and know where and to whom their money is going. Chelsea could have picked up the problem if she had been aware of money going out of her bank account to pay the premiums.
