Mobile phone insurer who failed to handle claims fairly hit with £5.2m fine

Posted Nov 29, 2018.
The European arm of insurance giant Liberty Mutual has been hit with a £5.2 million fine after the UK’s Financial Conduct Authority (FCA) found that the US based insurer had failed its customers in not handling mobile phone claims fairly.

In 2010 Liberty Mutual started to use a third party business to handle its mobile phone claims, which are usually for loss or damage of smartphone devices. It seems that the claims problems started with this new third party, and over a five year period Liberty’s customers were far more likely to find that their claims were not being handled properly. As well as problems with handling and settling claims, the third party was also responsible for a marked deterioration in Liberty’s complaints resolution service. The FCA found that some claims were unfairly declined or not properly investigated, while some customers who complained had the original decision overturned whilst others had their complaints dismissed quickly without proper consideration and full investigation.

Commenting on the case, the FCA’s  Mark Steward, director of enforcement and market oversight said:
“Fair, effective, and prompt settlement of claims is a fundamental requirement of mobile phone insurance, and customers should expect that any claim they make, or any subsequent complaint they lodge, will be dealt with fairly… Insurers must put in place adequate measures to make sure that claims and complaints and handled fairly, especially where those functions are outsourced.”

The £5.2 million fine from the FCA took into account that Liberty had already paid out £4 million to customers who may have been affected, and the insurers decision to settle early with the FCA also resulted in a 30% discount on the maximum potential fine of £7.5 million.


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