Life Insurance Advice Ranks Low on FOS Radar


Life insurance disputes account for around 5% of all disputes taken to the Financial Ombudsman Service (FOS), well behind credit and general insurance disputes and roughly on par with investments disputes.

The number of disputes was released by FOS as part of its annual report which showed that the complaints resolution scheme received 31,895 disputes in the 2014-15 reporting period, of which 23,344 actually fell into the jurisdiction of FOS.

Of this latter number, 1,227 disputes related to life insurance compared with 1,332 for investments, 6,780 for general insurance and 12,601 for credit disputes.

Despite the relative low numbers for life insurance disputes FOS said the number has risen by 6% from last year due to a 20% increase in the number of disputes linked to non-income stream risk products, mainly in the areas of total and permanent disability and term life insurance.

Denial of claims was the most common reason consumers raised a dispute with FOS, at 32% of disputes, but was marginally higher in income stream risk disputes at 37% than non-income stream risk disputes at 26%.

Of continuing concern is the failure of FSPs to use correct policy provisions and to rely on more recent versions with less beneficial terms.

Of the 677 disputes relating to income stream risk products, more than 80% involved income protection insurance, and centred around the decision of a financial services provider (FSP) to deny a claim.

FOS said a decision to deny a claim “… remains a prevalent complaint for income protection insurance” accounting for 59% of disputes relating to income stream risk products.

“Within these disputes, the applicants complained that the FSP was not willing to accept information provided in support of claims without corroborating evidence,” FOS stated.

“Complaints about claim amounts and incorrect premiums together with disputes over denial of claim and claim handling delays were key themes associated with income protection insurance.”

“Of continuing concern is the failure of FSPs to use correct policy provisions and to rely on more recent versions with less beneficial terms.”

In the area of non-income stream risk half of the 550 disputes related to a decision made by a FSP while only 7% related to advice around the insurance product.

One third of those cases were related to total and permanent disability insurance with denial of claim once again ranking as the top reason for lodging a dispute followed by delays in claim handling.



  1. Too bad we are being treated like scoundrels particularly in light of these facts.
    Want to see that 5% grow? It will leap up when 00’s of small advisers leave the industry if LIF gets up.

  2. So the majority of complaints involved claims being denied. I must have missed the government inquiry into this? And the FSC ‘s suggestions to address the problem.

Comments are closed.