There have been complaints to media from time to time against HK insurance companies for not treating their customers fairly, but seldom we've seen disciplinary actions taken by the Insurance Authority and made known to the public.
FSA recently fined Hastings Insurance Services Ltd £735,000 for failing to treat its customers fairly in relation to cancelling around 4,550 incorrectly priced car insurance policies.
During two separate periods between Jul and Sep 2007, Hastings discovered that due to an internal system error, inaccurate insurance quotations were given to customers, which resulted in some of them paying significantly lower premiums than they should have. Hastings cancelled the policies but in doing so failed to give sufficient consideration to paying the premium shortfall to the insurance provider or investigating other possible remedies.
FSA found that the firm had invoked a cancellation clause to cancel the policies which FSA considers was not generally intended to be used in circumstances such as these. The way in which the policies were cancelled and the service that the firm gave to its customers following the cancellation showed the firm focussed on the financial cost to itself and did not properly consider the alternatives or the detrimental effect on customers.
Following these incidents the firm has now strengthened the controls surrounding customer treatment and agreed with FSA to write to all affected customers and review the compensation it offered to ensure that its customers are treated fairly.
It is indeed quite ridiculous that customers have to suffer from an internal system error in this way.
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