DRN-3344191
The complaint
Mr and Mrs N are unhappy with the partial settlement offer made by Allianz Global
Assistance (Allianz) on their travel insurance cancellation claim.
Mr and Mrs N would like a full refund of the costs they incurred.
Any reference to Allianz includes all its agents.
What happened
Mr and Mrs N have a travel insurance policy alongside their bank current account. The policy
is underwritten by Allianz.
On 12 February 2020, Mr and Mrs N booked a bareboat charter for two weeks. The boat
was able to have a maximum of seven guests. Their intended travel dates were from 22
August 2020 until 5 September 2020. Mr and Mrs N paid the total cost of the charter and
they were going to be joined by their two daughters, a week at a time, over the two weeks.
On 20 August 2020, the Foreign, Commonwealth & Development Office (FCDO) - previously
known as the Foreign and Commonwealth Office (FCO), advised against all but essential
travel to the country where the boat was due to be chartered. This advice remained in place
until beyond the intended date of Mr and Mrs N’s travel. So, they decided to cancel the
charter.
Mr and Mrs N attempted to recover the cost of the charter from the charter company and
also through their credit card provider. Neither of these offered a refund. The charter
company however offered a credit voucher for Mr and Mrs N to make a booking in the next
year in the same boat. Mr and Mrs N did not want to accept this and said it was impractical
for them to rebook because of both their ages and that they were vulnerable.
They therefore made a claim on their travel insurance policy with Allianz. It declined the
claim initially because the charter company offered Mr and Mrs N the option to rebook at a
future date and said the cost was recoverable. However, Mr and Mrs N said the option to
rebook was impractical for them because of their ages and that they were both vulnerable.
Allianz reconsidered the claim and decided to settle it partially as a gesture of goodwill and
with no admission of liability. It offered to pay Mr and Mrs N two thirds of the cost of the
charter. This was because their daughters were due to join them for a week each and they
weren’t beneficiaries under the policy. Allianz therefore their daughters should claim under
their own travel insurance policies. Allianz also said that Mr and Mrs N hadn’t taken out
guest insurance, so it was only liable for both Mr and Mrs N’s share of the financial loss.
Further communication went back and forth between the two parties as Mr and Mrs N had
pointed out that they paid for the full cost of the charter and their daughters had not suffered
the financial loss. They say under the policy they have cover for the cancellation of the
chartered boat and the event that caused this – FCDO advising against all but essential
travel – was one that was covered.
Unhappy with Allianz’s response, Mr and Mrs N brought their complaint to this service. Our
investigator looked into it and didn’t uphold it.
She said under the policy terms and conditions, because Mr and Mrs N were offered a credit
voucher with an option of making a future booking, the cost was recoverable and therefore
the claim isn’t covered. She said Allianz were entitled to decline Mr and Mrs N’s claim.
She also said that Allianz offered a partial settlement on a goodwill basis and without
admission of liability. It offered to pay two thirds of claim cost which was the policy
beneficiary’s proportion of the booking – their daughter’s proportion was deducted. This was
at Allianz’s discretion and the offer was made with no admission of liability. Our investigator
said the claim hadn’t been accepted as it was settled on a goodwill basis.
Mr and Mrs N disagreed and asked for the complaint to be referred to an ombudsman. So,
the complaint has been passed to me.
Mr and Mrs N say that because the claim has been accepted by Allianz, it isn’t fair that the
offer is limited to the insured beneficiaries’ proportion of the booking. They say their
daughters didn’t incur the financial loss as they paid the full cost of the charter. They would
like the full cost of the charter refunded.
What I’ve decided – and why
I’ve considered all the available evidence and arguments to decide what’s fair and
reasonable in the circumstances of this complaint.
The insurance industry regulator, the Financial Conduct Authority (‘FCA’), has set out rules
and guidance for insurers in the ‘Insurance: Conduct of Business Sourcebook’ (‘ICOBS’).
ICOBS says that insurers should act honestly, fairly and professionally in accordance with
the best interests of their customers, and that they should handle claims promptly and fairly
and shouldn’t unreasonably reject a claim.
I’ve started by looking at the terms and conditions of Mr and Mrs N’s travel policy as this
forms the basis of their contract with Allianz.
Under the cancellation and curtailment/loss of holiday section of their policy on page 24, it
says:
“Section 4 – Cancellation and curtailment/loss of holiday If beneficiaries are forced to:
a) cancel their trip before their outward travel or curtail their trip after departure
(under (i) below, curtailment cover is extended to include cover for loss of holiday
where applicable for a period in excess of 24 hours), as a direct and necessary result
of any cause listed below …
(vi) The UK Foreign and Commonwealth Office or the equivalent government
authority in the beneficiary’s country of residence advising against ‘all travel’
or ‘all but essential travel’ to the beneficiary’s intended destination. For specific
country advice, you can visit the Foreign and Commonwealth Office (FCO)
website at www.gov.uk/foreign-travel-advice
The insurer will pay
In the case of cancellation, the beneficiary’s share of:
• the cost of deposits and trip expenses (including interconnecting flights) which
are not recoverable from any other source, or …”
While the policy provides cover for cancellation where the FCDO advises against all but
essential travel, the cover is for those costs which are not recoverable from any other
source. This is a common term found in most, if not all, travel insurance policies on the
market as insurance is intended to step in as a ‘last resort’ where a policyholder has no other
means of recovering their loss.
A voucher does have an intrinsic financial value. I’d generally consider the offer of a voucher
to mean that a consumer should reasonably be considered to have recovered their loss from
elsewhere. This is subject to the terms of that voucher not being unduly restrictive and/or
taking the consumer’s individual circumstances into account.
There’s limited information available to me about the terms of the voucher which Mr and Mrs
N were offered – and Mr and Mrs N haven’t provided the information we’ve asked for about
the terms of the voucher.
I’ve considered the terms of the voucher that I am aware of, as well as Mr and Mrs N’s
individual circumstances. Overall, I don’t think there’s any reasonable grounds upon which I
could say the voucher is unduly restrictive. So, I don’t think it was unreasonable or unfair for
Allianz to initially decline the claim as the cost was recoverable.
Allianz subsequently reconsidered its position and made an offer to pay Mr and Mrs N a
partial settlement. This was as a gesture of goodwill – and outside of the cover offered by
the terms and conditions of the policy. So, it’s not correct to say Allianz has accepted the
claim.
Allianz has already offered to pay Mr and Mrs N more than I think it needed to under the
terms and conditions of their policy, so I won’t be directing Allianz to do anything further.
It's therefore up to Mr and Mrs N to now decide whether they wish to accept the offer or not.
If they wish to accept it, they should contact Allianz directly and inform it of this.
My final decision
For the reasons given above, I don’t uphold Mr and Mrs N’s complaint against Allianz Global
Assistance
Under the rules of the Financial Ombudsman Service, I’m required to ask Mr N and Mrs N to
accept or reject my decision before 10 May 2022.
Nimisha Radia
Ombudsman
