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Changes to how we deal with protection policies with premium arrears

New process starts 3 August 2009

On 3 August we’re changing the way we deal with protection policies where a direct debit has been cancelled or premium payment rejected.  As part of the change we’re also removing the ability to reinstate a policy once it has been lapsed.

Why are we making the changes?

We want to make sure that our customers have the opportunity to make a payment should their premium reject; or send us new payment details should their direct debit cancel.

We’re changing the letters we issue to to make it clearer what has happened, and what we need to get the policy up to date.  Our studies have shown that customers who want to keep their policy following a cancelled Direct Debit get back to us within a week of us contacting them.

Where we don’t get the information we need in time we want to make it clear that we’ll cancel the policy due to non payment of premiums.  Our studies also showed that those that don’t get back to us actually wanted to cancel their policy  - so, providing the customer with a clear response date means we don’t leave the policy running longer than is necessary.

What are the changes?

§     When a direct debit has been cancelled we’ll issue one letter requesting a new mandate.  If we don’t get a response and any outstanding premiums by the date given we’ll cancel the policy.

§          For policies where a payment rejects and the direct debit is still in force all customers will have two opportunties to make any missed payment.  Firstly we’ll apply for the money again, if that’s not successful we’ll give an extra 14 days for the customer to make the payment.  If we don’t get a response and any outstanding premiums by the date given we’ll cancel the policy.

§          We’re removing the ability to reinstate a policy after it has been cancelled.

Removing reinstatements

We’ve also taken to the opportunity to review reinstatements of protection policies and have made the decision to remove them with effect from 1 August 2009.  Some of the main reasons for doing this are:

§          To ensure consistency across our protection products.

§          Better information and clear deadlines in our new premium arrears letters.

§          The introduction of debit card payments – now outstanding premiums can be paid immediately over the phone.  (Dedicated line – 0808 10 10 861)

§          Being able to set a new Direct Debit up over the phone.

We know that there will be some crossover when the new process starts.  To help deal with these scenarios there will be a transitional period during which the following rules will apply:

§          A policy has more than 3 months premiums outstanding

We’ll no longer offer reinstatements on any policy with 3 months premiums outstanding from 3 August.  Those received before this date will be considered*.

§          We’ve already issued an old style letter

If we’ve already issued an old style letter (which won’t confirm that we can’t reinstate) we’ll consider* reinstatement providing there are less than 3 months premiums outstanding and a new DD and any outstanding premiums are paid.

§          We’ve issued a new style premium arrears and lapse letter

If we’ve issued the new style letters we will not consider reinstatement.

§          We’ve already asked for reinstatement information

Where we’ve already asked for a reinstatement application and the information comes in after 1 August we will still consider* the application.

* We will only consider a reinstatement if we receive the relevant application, a new direct debit and payment for outstanding premiums.  The application may still be declined following underwriting.

Further information

For more details about the new process please contact us on your usual number, found in the contacts page.