FSCL Case Study

A client had home, contents, and motor vehicle insurance with her insurer for a number of years. The insurer required the client to arrange the insurance through a broker, and insurance had to be paid by annual premiums.

In February 2020, her broker reminded her that her insurance policies were coming up for annual renewal. However, the Covid-19 pandemic had affected the client’s business and income, and she found she was unable to pay the annual premiums in one lump sum like she usually did.

Over the course of the next eight months, the client’s broker unsuccessfully tried to work out an acceptable payment solution. Eventually, the insurer had to cancel the client’s insurance because the premiums remained unpaid.

The client complained to FSCL about her broker. She thought her broker hadn’t properly represented her interests or taken into account the unprecedented circumstances of the Covid-19 pandemic when working out a solution.


The client wanted to pay monthly premiums and/or have a ‘premium holiday’, much like banks were offering to customers struggling with mortgage repayments due to the pandemic.

The broker said they couldn’t offer those solutions because to do so would put them outside of their payment/credit terms with the insurer. The broker said they had done all they could to help but, ultimately, the premiums remained unpaid and the insurer had decided to cancel the policies.


After reviewing the broker’s file, FSCL found that the broker had offered multiple solutions, including: 

•        Increasing the voluntary excesses under the policies to generate lower premiums.

•        Exploring whether the client was eligible for a low kilometres discount under her motor vehicle insurance policy.

•        Double checking the sums insured were accurate under the cilent’s policies (which would affect the amount of the premiums).

The broker had also liaised with the insurer to come up with a monthly premium payment option, which the client rejected because the payment amount was still too high for her.

FSCL found the broker had met their legal obligation to act with reasonable skill, care and diligence by proposing multiple solutions to the client and liaising with the insurer to offer the best payment solution possible.

FSCL told the client that the broker wasn’t required to offer a premium holiday or lower monthly premiums in order to meet their obligations, even in the unprecedented circumstances of the Covid-19 pandemic. These solutions would have put the broker outside of their payment/credit terms with the insurer, requiring them to cover any shortfall to make it work.


FSCL issued a final decision recommending the client discontinue her complaint.

The client was disappointed with the outcome, but fortunately had found cheaper, comparable cover with another insurer who didn’t require her to use a broker as an intermediary.

June 2021

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