The UK protection insurance sector has been urged to up its game in tackling domestic economic abuse enacted through the use of protection policies.
Johnny Timpson set out a four pronged plan which included an appeal to stop writing joint life cover and for insurers and the wider industry to fund building the legal case for a change to insurance law.
Economic abuse often presents itself in the form of intimate partner violence and involves the control of an ex-partner’s money and finances.
Timpson (pictured) revealed that while one in six women in the UK have experienced economic abuse at the hands of their current or former partner, men and those in same sex relationships are also victims of economic abuse.
One such example is ‘Helen’ an individual Timpson met five years ago.
“Her partner had been physically abusing her, controlled who she met, where she went, what she did, what she bought,” Timpson told delegates at the Protection Review conference.
“He had run up thousands, tens of thousands of pounds that she didn’t know about, that she was jointly responsible for. He set up joint life cover without her knowledge, but he continually made her aware that that cover was in place and said that he looks forward to benefitting from that policy when she dies.
“He was using that policy to intimidate Helen and there are lots of Helens out there.
“When the relationship broke down, he refused to stop the policy and that’s left Helen to this day fearful, intimidated and continually abused because the insurer hasn’t got permission from both parties, the cover cannot be split.”
End joint life and change law
In order to tackle the problem, Timpson called on insurers to help fund solutions to tackle the issue.
Presenting solutions to the issue, Timpson explained that Professor Jim Davey of the University of Bristol Law School and Surviving Economic Abuse charity would like to work with the insurance industry to make a definitive case for individual protection policies being the default recommendation.
He supported an amendment to insurance law to enable UK insurers to split policies without the permission of both lives where economic abuse is a factor as is the case in the US. Though Timpson conceded this work will require sponsorship and funding.
The sector also needs to ensure that protection is written correctly and placed in trust when appropriate with trustees briefed on their responsibilities, Timpson continued.
And Timpson called for mandating as part of professional development requirements, that everyone employed in the protection market study the Economic Abuse Guide for The Insurance Industry that has been developed by the Surviving Economic Abuse charity and legal firm Cooley – a guide that has been informed by Financial Ombudsman Service cases.
Turning to insurers, Timpson called on them to improve their monitoring of those they provide agencies to in order to improve conduct, professional standards and consumer outcomes.
He added that in Australia this involves mystery shopping by insurers as a quality check, and he recommended the industry in the UK follows Australia’s example, including network principals.
Red flags and Consumer Duty
Timpson said there are a number of red flags the industry can look out for.
“It’s the setting of the joint life policies where one partner in the policy is completely unaware the policy is in place.,” he said.
“They have not given consent to it. They’ve not shared their medical information. The policy has been set up on that basis. This is a real red flag.
“How did someone get accepted without physically applying for cover in the first place? This is a red flag not just for distributors, but it’s equally a red flag for the life offices, the agencies.”
And in concluding his talk, Timpson added the sector also needs to do more to tackle economic abuse due to the long-lasting effects it can have on individuals and the regulator’s looming Consumer Duty set for implementation next year.
“Economic and financial abuse is a form of coercive control. Its impacts can and sadly continue long after leaving a relationship and can have lifelong effects for men and women,” he continued.
“As an industry and a profession, we have a role to play in tackling it and let’s be clear, doing nothing is not an option.
“The Consumer Duty requires us to protect our customers from foreseeable harms and we know that relationships break down and financial abuse happens.
“We should be foreseeing the potential vulnerability and having individual policies in place and having the default option as a way of doing that.”