Dental nurse Jodie Hinchliffe was eight-and-a-half months pregnant with her first child when her father, Paul, died in 2012. Two weeks later, baby Georgie came along. Amid the nappies and the sleepless nights – and handling her father’s estate – the last thing she had was the strength to fight a giant insurance company.
Jodie was only vaguely aware that three years earlier Paul had visited an independent financial adviser, who had recommended that he take out a life insurance policy with Royal London that would pay her £350,000 on his death. After he died unexpectedly at the age of 49, Royal London promised Jodie that it would make a payment within eight weeks. But she had to wait six months – and it was then that Royal London dropped a bombshell.
It had trawled through her father’s records and found that he had not revealed all his medical details – principally his diabetes. As a result, it said, it would only pay out £95,000, because it would have charged him higher monthly premiums if it had known about the condition. Royal London also found a reference to high cholesterol in 2002 among his records, and raised blood pressure in 2003. It told her the payment of £95,000 would be on a strictly “ex gratia” basis and that it was in “full and final settlement”.
But Paul had not died from diabetes, or anything connected to diabetes, high cholesterol or blood pressure – and, as she was later to discover, the diabetes diagnosis actually came after he took out the policy.
“I got a call in which Royal London said either I take the £95,000 or I could have back the premiums he paid. It said I could seek advice but that I would get nowhere. I had a six-month-old baby and huge amounts going on in my life. I just wanted no more stress, so I accepted the £95,000. I don’t know anything about financial matters – I work in dentistry – and I remember that when we went for our mortgage I didn’t really understand anything about it.”
A few months later Jodie’s partner, Luke, was going through some old boxes of paperwork relating to her deceased father. He then made a startling discovery: he found notes showing that the diagnosis for Paul’s diabetes was made in December 2009, several months after he had taken out the policy. There even seemed to be some evidence that her father had rung the insurance company to inform them of his diagnosis.
“But I felt that the whole thing had happened, I had accepted the money, and that it would be a huge problem trying to take them on again,” says Jodie. Luke, though, was not so sure, and through an internet search found a lawyer specialising in life insurance and critical illness insurance cases – Jan Trainor of BTW Solicitors in the Wirral.
Trainor says: “Jodie is an only child and was brought up by her dad. He was an honest, hard-working man and a conscientious parent. Jodie was certain that her dad would not have answered questions incorrectly, or even in error, but she didn’t know how or if she could dispute it.”
Paul had been a project manager at a glazing firm. “He was just not the sort of person who would fill in forms incorrectly,” says Jodie.
Trainor carried out her own search of Paul’s medical records. They were undeniably messy: his GP practice had since closed down. What she did find was that he had not been prescribed any treatment for diabetes until 9 December – three months after he took out the policy.
“We sent this evidence to Royal London (trading as Bright Grey). It did not accept it,” says Trainor. So she took Jodie’s case to the Financial Ombudsman Service, but Royal London argued that it was beyond the FOS’s jurisdiction, as Jodie had already accepted a sum in full and final settlement, and it won an early adjudication in the insurer’s favour.
In submissions to the FOS, the company said it did not accept that the date of the diabetes diagnosis was wrong, and that in any case Jodie’s dad had seen the doctor about his blood pressure twice before the policy started.
But after appealing – and counter-appeals by Royal London – Jodie was last month finally vindicated. The ombudsman, in a final decision in March, said Royal London’s forms only asked for information about raised blood pressure or high cholesterol in the prior five years, so Paul had no obligation to disclose them in a 2009 application. The ombudsman also found that there was no clear evidence that the diabetes had been diagnosed before the policy was taken out. “I think the earliest he could have been diagnosed with diabetes was 3 December 2009 – after the policy had started,” the ombudsman said.
The ombudsman ordered Royal London to make a full payment on the policy, plus interest at 8.5% a year for the period during which it failed to pay out. That would bring the total on the policy to more than £400,000.
But that wasn’t the end of the matter. The maximum sum that the financial ombudsman can award is £150,000. Jodie’s solicitor, Trainor, wrote to Royal London twice asking it to confirm that it would follow the ombudsman’s ruling. Each time she had no response. Fearing that her client would not obtain a full payout, she contacted Guardian Money.
We approached Royal London to ask if it was going to stand by the ombudsman’s ruling, and how many insurance claims it rejects.
Two days later, the insurance giant, which runs nine million policies in the UK, contacted Jodie to say that it would make the full payment. “I suspect that but for the intervention of the Guardian, and given that Royal London had not confirmed its intention to either the FOS or to us, that it would not have followed the recommendations – but I am pleased if that is incorrect,” says Trainor.
In a statement Royal London said: “During our assessment of Miss Hinchliffe’s claim we became aware of significant non-disclosure of medical information by [her late father] before his plan started. Using the Association of British Insurers’ guidelines we categorised this non-disclosure as negligent, and a reduced amount was paid. Miss Hinchliffe accepted our decision in full and final settlement of the claim in 2013.
“After payment was made, Miss Hinchliffe complained to the Financial Ombudsman Service (FOS). FOS reviewed the complaint and agreed that there was negligent non-disclosure, and our decision was correct. Miss Hinchliffe then appealed this decision. The FOS issued a final decision on 29 March this year upholding this appeal and ruling that the non-disclosure was innocent and not negligent. On 6 April we were notified by FOS that Miss Hinchliffe had accepted its decision. We have agreed to follow the FOS recommendation to pay the claim in full, less payments already made.”
Royal London added that in 2015 it paid 98.3% of life insurance claims. “The few claims we decline or do not pay in full are considered extensively, and only when there is no alternative is such a decision made,” it said.
But Jodie is still angry about the way she was treated. She points out that throughout the battle it was a fact acknowledged on all sides that her father’s death had nothing to do with diabetes or blood pressure, but she feels that this was used to escape paying a full claim. “I was grieving and vulnerable at the time. I felt Royal London manipulated me to make me take the lower amount. I wouldn’t want anyone else to have to go through what we did.”
