Jeremy and Isla were each the owners of the other’s life insurance policy. The premiums for both policies were paid by direct debit from Jeremy’s bank account.
In 2018, Jeremy and Isla’s relationship ended.
In November 2018, Isla asked the insurer to transfer ownership of the policy over her life to her. The insurer sent a transfer of ownership form to Isla, which she and Jeremy completed. The insurer then sent Isla a direct debit form for her to make the premium payments in future. Isla did not return the form, and the insurer did not process the transfer of ownership.
The premiums for Jeremy and Isla’s policies continued to be paid by direct debit from Jeremy’s accounts.
In late 2022, Jeremy discovered he was still paying the premiums for Isla’s policy. Jeremy complained that the insurer had failed to carry out their 2018 instruction. Jeremy and Isla mistakenly thought at this point that they had instructed the insurer to cancel Isla’s policy rather than transfer ownership.
The insurer provided them with the information to show the 2018 instruction had been to transfer ownership of the policy.
In January 2023, Jeremy and Isla completed the documents to cancel Isla’s policy.
Jeremy asked the insurer to refund all the premiums he had paid for Isla’s policy from November 2018 to January 2023. The insurer offered to refund the premiums from November 2018 to November 2019, an amount of $1,009. Jeremy did not accept the offer and complained to FSCL.
Jeremy said that as the insurer had not transferred the ownership of the policy to Isla in November 2018, the insurer should reimburse him for all the premiums payments he made after this.
The insurer accepted they could have followed up with Isla when she did not send back the direct debit form. However, they did not think it was reasonable to say they should reimburse four years of premiums when Jeremy had opportunities to discover the problem earlier.
The insurer provided us with the cover letters and policy schedules for the annual renewals of the policies sent to Jeremy from 2018 to 2022. For Isla’s policy, the documents clearly recorded she was the life insured and Jeremy was the policy owner.
While the insurer accepted they could have contacted Isla in 2018 when she did not return the direct debit form, we noted that Jeremy had opportunities to discover the situation much earlier. He did not notice that he was continuing to pay for both policies. Further, he did not review the annual renewal information sent to him over the following four years.
We suggested that Jeremy further consider the insurer’s offer, given the opportunities he had to discover the situation earlier.
Jeremy decided to accept the insurer’s offer, and we closed our file.
Insights for consumers or participants
Consumers should read their annual renewal notices for their insurance policies to check that they still meet their needs. Further, it is important for consumers to review bank statements to check the payments coming out of their accounts.
In circumstances where a consumer has given instructions to cancel a policy, insurers should follow up with the consumer if a further step is required to complete the matter.