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UK insurer Liberty fined $6.7 million for cellphone complaints failings

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By Kirstin Ridley

LONDON (Reuters) – Liberty Mutual Insurance Europe (LMIE) has been fined 5.3 million pounds by Britain’s markets regulator for failing to properly monitor outsourced mobile phone insurance services, in the first penalty for such failures.

Liberty outsourced mobile phone insurance services to a third party that failed to handle claims and complaints fairly over a five year period between July, 2010 and June, 2015, the Financial Conduct Authority (FCA) said on Tuesday.

Liberty backed a voluntary redress scheme in 2016 under which the unnamed company paid just over 3.0 million pounds to 14,000 customers whose claims might have been unfairly rejected. But the FCA said the insurer could not outsource regulatory responsibility.

“Insurers must put in place adequate measures to make sure that claims and complaints and handled fairly, especially where those functions are outsourced,” Mark Steward, the FCA’s director of enforcement and market oversight, said.

The fine comes five years after the FCA first highlighted the importance of fairness in the cellphone insurance market, which can be younger people’s first insurance product. The regulator reiterated insurers’ regulatory obligations for overseeing outsourcing arrangements in 2015.

The FCA said some claims had been unfairly declined or not investigated adequately. Some customers who complained had the original decision overturned but others had complaints dismissed without a proper investigation.

Less than one percent of customers had suffered unfairness, the problems had been addressed, redress paid and LMIE no longer sold mobile phone insurance to new customers, said Liberty Speciality Markets, a company born of the merger of LMIE and Liberty Syndicates.

The insurer, which settled the case at an early stage and therefore qualified for a 30 percent discount, said it now put customers “at the heart of everything we do”.

(Reporting by Kirstin Ridley; Editing by Alexander Smith)

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