Liberty Mutual Insurance Europe SE fined £5.2m for oversight failures

UK insurer Liberty Mutual Insurance Europe SE has been fined £5.2 million over failures with mobile phone insurance claims and complaints handling.

The Financial Conduct Authority (FCA) said the failures took place between July 2010 and June 2015 after Liberty entered into a relationship with a third party to enable it to provide mobile phone insurance to UK customers.

The third party undertook the administration of claims and handling of complaints on Liberty’s behalf.

But the FCA said Liberty, which retained regulatory responsibility for ensuring that claims and complaints made by customers were handled fairly, did not ensure that adequate systems and controls to oversee the activities of the third party were in place.

The FCA said Liberty’s customers were “exposed to the possibility” that their claims and complaints would not be handled fairly.

It found that some claims were unfairly declined or not investigated adequately, and some customers had complaints dismissed without a proper investigation.

Mark Steward, executive director of enforcement and market oversight at the FCA, said: “Fair, effective, and prompt settlement of claims is a fundamental requirement of mobile phone insurance, and customers should expect that any claim they make, or any subsequent complaint they lodge, will be dealt with fairly.

“Insurers must put in place adequate measures to make sure that claims and complaints and handled fairly, especially where those functions are outsourced.”

The FCA said Liberty settled at an early stage of the investigation and therefore qualified for a 30% discount. Without the discount, the financial penalty would have been £7,544,000.

The total amount of redress offered to customers who may have suffered detriment was nearly £4 million and had been taken into account in calculating the financial penalty, the regulator added.