The High Court has set aside a Financial Services and Pensions Ombudsman decision that directed Utmost Paneurope DAC to admit a woman’s income protection claim and make payments from the end of the policy’s deferred period.
In a judgment delivered on 10 November 2020, Mr Justice Garrett Simons held that the Ombudsman’s assessment of the insurer’s handling of the claim contained serious and significant errors of law. The court found that the Ombudsman had criticised the insurer’s focus on whether the woman’s rheumatoid arthritis, rather than excluded fibromyalgia, prevented her from working, without assessing the insurer’s conduct against the relevant Consumer Protection Code provisions.
The woman, whose name and address are subject to a publication restriction, joined a group income protection scheme in 2006 with exclusions that included claims related to fibromyalgia. Utmost declined her 2016 claim, saying her inability to work was not attributable to a non-excluded illness. The Ombudsman upheld her complaint in July 2019, finding the insurer had placed excessive emphasis on the excluded condition. It directed the insurer to admit the claim, while retaining the right to review it later under the policy.
The High Court said the Ombudsman’s decision was narrowly based on unreasonable or improper conduct in assessing the claim. It was not a finding that the insurer had breached the policy or that the woman’s inability to work was caused entirely by rheumatoid arthritis. The judgment noted that the Consumer Protection Code required a regulated entity to endeavour to verify a claim’s validity before deciding its outcome. The Ombudsman had cited that provision but did not explain why the insurer’s investigation was inconsistent with it.
The court also found that the insurer’s query to an independent medical examiner about the impact of rheumatoid arthritis if fibromyalgia were excluded was legitimate. It said the claim could not properly be assessed without considering the relative impact of the two conditions. The court rejected other inferences drawn by the Ombudsman from insurer correspondence.
Separately, the judge said that even if the Ombudsman’s finding of misconduct had stood, directing the insurer to admit the claim was not a lawful remedy on the findings made. The Ombudsman had not determined that the claim met the policy’s disability definition, and the provision allowing future review did not cure that problem.
The court granted an unopposed extension of time for the appeal, which had been filed late after notification of the Ombudsman’s decision was misfiled within the insurer’s offices. It set aside the Ombudsman’s decision and direction of 15 July 2019 in their entirety and restricted publication or broadcast of the woman’s name and address. The judgment invited written submissions on costs if the parties could not agree.