26 september 2023, 09:31

Insurance premium refund disputes reduced in first half of 2023, according to Financial Ombudsman

Consumers of financial services have become less likely to appeal to the Financial Ombudsman on disputes related to the refusal to refund insurance premium in credit insurance, according to Chief Financial Ombudsman Yury Voronin.

The number of appeals related to refusal to refund life insurance premiums or disagreement with the refund amount decreased by 30.9 per cent to 4,572 appeals in the first half of 2023 (with 6,620 appeals in the same period of 2022).

“As a rule, consumers apply for a refund of part of the insurance premium when they cancelled the insurance after having repaid the loan before the due date. But not always do financial institutions fulfil their obligations. If the consumer was treated unfairly, contrary to the law, we do restore their rights”, Yury Voronin pointed out. According to him, partly the reduction of such disputes is accounted for by the fact that the law norm has been in full effect now (coming into force on 1 September 2020 and applying to contracts concluded after this date), according to which the return of part of the premium is allowed in case of cancellation of the insurance contract due to prescheduled full repayment of the loan in proportion to the unused period, if such a contract is concluded to ensure the performance of the borrower’s obligations under the consumer credit (loan) agreement, and not only within the “cooling-off” period.

In general, the number of appeals to the Financial Ombudsman in the first half of 2023 against insurance organisations decreased by 8.3 per cent to 62,277. The most notable decrease in the number of appeals occurred in life insurance, accident and sickness insurance by 21.7 per cent (to 7,971 appeals). In this sector, in terms of the dispute subject matter, in addition to the above-mentioned disputes on the return of insurance premium, the number of appeals related to the refusal of insurance payment decreased by 13.3 per cent (up to 1,823 appeals), but the number of disputes on violation of the terms of payment or return of premium increased by 62.1 per cent (up to 723).

The number of appeals decreased by 6.9 per cent in the MTPL segment (to 49,013 appeals). At the same time, in terms of the dispute subject matter, the number of appeals regarding disagreement with the amount of insurance compensation increased by 5.7 per cent (up to 26,761). In other types of disputes in CMTPL insurance there was observed a decrease: violation of payment terms (by 7.6 per cent, up to 11,828), refusal to pay (28.7 per cent, up to 7,306), disagreement with the quality of repairs made (20.5 per cent, up to 325).

“Another tendency in insurance is the growth in the number of appeals for voluntary “motor” insurance, i.e. hull insurance (by 14.9 per cent, up to 3,358 appeals). Consumers appeal about disagreement with the amount of insurance compensation, refusal to pay out. The number of disputes due to violation of indemnity terms has grown significantly, by 39.2 per cent, and by 5.1 per cent due to poor-quality repairs. Obviously, the problem here is related to the shortage of spare parts and the ensuing circumstances,” Yury Voronin added.

Copy link