The dispute in question revolved around a home and contents policy that the applicant had used an insurance broker to arrange.
In 2009, the client provided the broker with valuations for 11 items of jewellery they wished to have nominated under their policy. As the individual value for 10 of the 11 items was less than $2000 each, the broker nominated a solitary ring under the policy, as the rest of the items would be covered under the policy terms.
There was every chance that the clients were not aware of the change of cover and it is the broker’s role to inform them of such changes.
Sometime after this, the broker moved the clients’ policy from the original insurer to another without informing the clients.
In March 2014, a burglary led to the clients making a claim. However, it was only after lodging a claim that the clients became aware that the broker had changed the insurer without notification to them.
Under the new policy, they were not covered for the total loss of their jewellery, even though they had previously provided the broker with valuations for these specific items.
Called upon to resolve the dispute, FOS found in favour of the clients.
Specifically, the ombudsman found that the broker should have more carefully managed the clients’ insurance needs.
There was every chance that the clients were not aware of the change of cover and it is the broker’s role to inform them of such changes and the effects they could have on the client’s cover.
The broker accepted the FOS recommendation and compensated the clients a total of approximately $33,000 in full and final settlement of their losses.
The Insurance Brokers Code Compliance Committee is currently investigating whether the broker acted in breach of its obligations under service standard five of the Insurance Brokers Code of Practice.