Norwich Union reviews approach to non-disclosure claims

Article date: 17 January 2008

Norwich Union has altered its approach to claims affected by non-disclosure, in light of new guidelines from the ABI (Association of British Insurers).

An ABI report published last week (09 January 2008) outlines a new directive which recommends insurers make proportional payouts in cases of non-disclosure, unless the customer deliberately withheld information. Norwich Union, the UK's largest insurer, has adopted this policy with immediate effect on its life insurance, critical illness and income protection products.

The guidelines state that where relevant information has not been provided, insurers will pay customers a fair sum, reflecting the risk posed by the individual and premiums paid. In a small number of cases, premiums will be refunded if the non- disclosure is of such a nature that the insurer would not have taken on the policy had it had known the full facts. All Norwich Union claims will be considered on a case-by-case basis.

The move follows a series of pioneering initiatives in 2007 by Norwich Union which aimed to tackle the issue of non-disclosure with both consumers and advisers to drive down the number of claims declined for this reason.

Most notably, during the summer of 2007, the insurer carried out a pilot where nearly 5,000 existing customers were asked to review their original protection policy applications. The aim of the scheme was to enable life insurance and critical illness cover customers to correct any mistakes or omissions made on their applications, which could have invalidated any future claims.

The project found that 236 customers disclosed further information*, 33 cases being classed as ‘significant' with the potential to affect the underwriting decision.

Willie Mowatt, director of protection for Norwich Union, says: "We welcome any initiative which aims to reduce the number of claims declined by insurers. Non-disclosure has been an industry-wide problem for some time now, so the latest ABI guidelines are a great step forward to help tackle the issue.

"We were also very impressed with the response we received through our pilot exercise. Nearly 600 recipients replied in total**, which shows that consumers are taking the issue of non-disclosure seriously. We believe that a combination of action already taken at the application stage to ensure that the need for disclosure is well understood, and the new ABI guidelines will go a long way to reduce the number of claims which are declined as a result of this. However, the only way people can be sure of receiving a full payment in the event of a valid claim, is to fully disclose at the outset of their policy. This way customers can have greater peace of mind in the event that they need to make a claim.

"We would always advise people that if they feel they may have missed something off their application, it is better to inform their insurer to make sure their policy is valid, than to risk receiving a partial payment or a rejected claim at a later date."

The ABI guidelines state that where a customer makes a claim but is found to have non-disclosed on their application, they may still receive a proportional payment. Claims will only be declined outright if a customer is found to have non-disclosed deliberately or filled out their application ‘without any care'.

Willie Mowatt adds: "Norwich Union has been heavily involved with creating these new ABI guidelines and we wholeheartedly support any such initiative which can provide fairer treatment to all of our customers."


*The pilot was conducted in two waves to test the effectiveness of two different methods. In the first stage, 2,500 customers were targeted with a customer reply form asking medical questions similar to those on a standard application. In the second wave, 2,058 customers were each provided with their actual application forms to verify the original information they provided.

Of the first wave, 17.5% responded and 7.6% disclosed further information. 1% of disclosures were significant and required the insurer to gather further medical information to investigate whether the policy needed to be amended.

Notably fewer people responded when faced with their original application forms. 7.5% responded with a total of 2.2% disclosing further information. 0.3% of the total sample provided further information which required medical investigation.

‘Significant information' refers to a disclosure which demanded further medical investigation such as interviews with a nurse or requests for medical records. Around half of people who disclosed significant information would have required modifications to their policies such as altered premiums or exclusions, had they disclosed this information at the policy's outset. For the purposes of this exercise most policies were allowed to continue as before.

Only one policy had to be cancelled due to a high level of non disclosure revealed. Had this person disclosed full information at their policy's outset, Norwich Union would unfortunately have been unable to offer cover.

** Not all respondents disclosed further information.

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About Norwich Union

  • Norwich Union is the UK's largest insurer. It is a leading provider of life, pensions and investment products and one of the largest Financial Adviser (FA) providers. FAs provide over 70% of the company's long-term savings business in the UK.
  • Norwich Union is the UK's largest general insurer with a market share of around 14%, with a focus on insurance for individuals and small businesses.
  • Norwich Union's news releases and a selection of images are available from Aviva's internet press centre at

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