I believe that it would have been reasonable for Scottish Mutual to await your response to treatment at the time.
I am both bitterly disappointed and amazed at that finding. In my view, to defer an assessment of terminal illness until after treatment is contrary to Scottish Providents own stipulation, which states that someone must be suffering from a terminal illness with a life expectancy of less than 12 months as diagnosed by the attending consultant. It is my view that Scottish Provident, backed by the ombudsman, is deliberately breaking the rule and spirit of its own policy, as nowhere does it state it must wait and see.
The UK insurance industry is the largest in Europe and the third largest in the world. I am not suggesting that this case in any way reflects on an industry that rightly prides itself on the quality of its products. I hope that this case is a rarity and no one else has had to suffer what Mrs. Hurrell has gone through.
Scottish Provident is the brand name of Scottish Mutual Assurance Ltd. On its website it describes itself as one the leading providers of life, terminal illness, income protection and unemployment cover. It states that it has a track record that can be trusted, concluding with the statement that since 1996 it has consistently paid out on claims. This certainly is not the case for Mrs. Hurrell. Frankly, the company has behaved disgracefully by first misinforming Mr. and Mrs. Hurrell that they were not coveredit did that not once, but twiceand then refusing to pay what was an entirely legitimate claim and offering an insulting £150 for her distress and inconvenience, instead of paying out the £60,000 she was entitled to.
Mrs. Hurrells situation is not good. The disease returned some months ago and she has been very ill. This has been an extremely traumatic period for Mrs. Hurrell and I cannot help but believe that the anxiety, distress and pressure that she has had to deal with as a result of the dispute with Scottish Provident
will have had a detrimental effect on her health. When Mr. and Mrs. Hurrell took out the terminal illness cover, they will have hoped that it was a claim they would never have to make. Sadly, that proved not to be the case. It appears as if Scottish Provident has been determined to prevent this claim from being successful. However, even at this 11th hour I hope that Scottish Provident will take positive action to resolve this claim in favour of Mrs. Hurrell. I also request that my hon. Friend examines the regulations pertaining to insurance companies with a view to ensuring that there is greater clarity and protection for customers and preventing insurance companies from taking advantage of the often ambiguous wording of their policies. Mr. and Mrs. Hurrell did everything responsibly, including ensuring that they had adequate insurance cover. I ask my hon. Friend the Minister to join me in calling on Scottish Provident to pay Mr. and Mrs. Hurrell, even at this late date, the full amount of the policy that they are entitled to.
The Exchequer Secretary to the Treasury (Angela Eagle): I congratulate my hon. Friend the Member for Wansbeck (Mr. Murphy) on securing this debate on an extremely important and particular casehe outlined it in great detailthat also gives rise to general issues regarding the way that insurance is regulated.
I want to start by saying how sorry I am to hear of Mrs. Hurrells illness, which on its own must have made the past few years incredibly difficult. I am sure that the frustrations, which my hon. Friend has outlined, with her insurance policy and with the Financial Ombudsman Service have only added to her distress. I certainly hope that the company has been listening extremely carefully to my hon. Friend tonight.
What happened to Mrs. Hurrell demonstrates that although insurance is a hugely important product that can provide customers with peace of mind as well as financial protection, it can also be complex. It is important that all customers know what they are buying, and that they are appropriately informed by the professional services that the insurance industry brings to bear on products that it has sold. This is one reason why the Government replaced the confusing collection of financial service regulators, complaint adjudicators and compensation schemes that we inherited in 1997 with the Financial Services Authority, the financial services compensation scheme and the Financial Ombudsman Service.
The FSA is now responsible for the regulation of the insurance industry and has laid down detailed rules on all aspects of the conduct of business of regulated firms. In a constantly evolving market, however, as my hon. Friend demonstrated, rules-based regulation can often lag behind new products or circumstances. That is why the FSA is moving toward more principle-based regulation, instead of specifying detailed processes to be performed. This means being clear about the required regulatory outcomes, and then using supervision and enforcement to ensure that they are achieved. The new, simplified conduct-of-business rules that the FSA published in November, and for the insurance sector specifically in January, take this approach. That does not mean that the rules have been relaxed, however. The FSA also took the opportunity to require firms to take reasonable
steps to establish that customers would be eligible to make a claim under a particular policy, and to ensure better standards of disclosure, so that consumers can make more informed decisions.
This approach is also reinforced by the general principle that firms must treat customers fairly. Obviously, firms should be doing that already, and I will leave it for others to judge what has happened in this instance, but by the end of the year, firms will have to be able to demonstrate to themselves and to the FSA that they are consistently treating their customers fairly. In particular, they will need to demonstrate that customers are provided with clear information and kept appropriately informed before, during and after the point of sale, and that any advice is suitable and takes account of their circumstances. Again, whether this has been achieved in this very difficult instance is for other people to judge.
On Mrs. Hurrells specific case, let me say again that I am sorry to hear of the difficulties that she has had with her health and, as a consequence, with the insurance policies that she took out and with the Financial Ombudsman Service, on top of her illness. I think it best, given the information that my hon. Friend has put before the House tonight, if I invite him to write to me with more details and specific dates. I will certainly refer this case to Hector Sants, the FSAs chief executive,
asking him to get in touch with my hon. Friend to explain the impact of such regulations. I also want to write to the Association of British Insurers director-general, drawing attention to this case and asking him to take Mrs. Hurrells experience into account when the industry reviews, in the 12-month period to 2009, the definition of terminal illness that is used across the whole insurance industry, to see whether changes can be made that might make the definition more understandable for everybody concerned.
I also wish to contact the Financial Ombudsman Service again, given some of the details that my hon. Friend has put before the House tonight, so that it can check whether it has got everything right in its adjudications so far. If my hon. Friend will write to me soon, I will ensure that I get the letters sent to the appropriate people to see if there is any way forward in this case.
I also hope that the insurer has listened to what my hon. Friend has to say. If it wished, it could take the matter forward to a satisfactory conclusion, although that is of course a matter for it and not for me. However, I can assure my hon. Friend that I will make inquiries to see whether anything else can be done in these very particular circumstances to make any progress in Mrs. Hurrells unfortunate situation.