Aviva Insurance Limited · DRN-6235505

The complaint Mr U is unhappy with the way Aviva Insurance Limited handled a claim made under on a group medical insurance policy he was a beneficiary of (‘the policy’). That includes its decision to ultimately not cover a medical procedure which it had previously authorised. What happened I issued a provisional decision explaining why I was intending to uphold a limited aspect of this complaint. An extract of my provisional decision is set out below: …………………………………………….. I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. That includes all points made by the parties (along with all the other evidence). However, I won’t respond to each of these. I hope they understand that no discourtesy is intended by this. Instead, I’ve focussed on what I think are the key issues here. The rules that govern the Financial Ombudsman Service allow me to do this as we are an informal dispute resolution service. If there’s something I’ve not mentioned, it isn’t because I’ve overlooked it. I haven’t. I’m satisfied I don’t need to comment on every point to fulfil my statutory remit. So that everyone is clear, I’ve only considered matters up to the date of Aviva’s final response dated 1 May 2025. When considering what’s fair and reasonable in all the circumstances of this complaint, I’ve taken into account relevant law and regulations, regulator’s rules, guidance and standards, codes of practice and good industry practice at the relevant time. That includes but is not limited to: • Aviva’s regulatory obligation to handle insurance claims fairly and promptly – and to not unreasonably decline a claim; and • The Insurance Act 2015 (‘the IA’). The decision to not cover the medical procedure Here the policyholder is a named company. The application form was completed by Mr U and it’s reflected that he named himself as a director of the policyholder. I’m satisfied that this was a non-consumer contract. The IA says that before a (non-consumer) contract of insurance is entered into, the insured must make to the insurer a fair presentation of the risk. That is disclosure of every material circumstance which the insured knows or ought to know. Or failing that, disclosure which gives the insurer sufficient information to put a prudent insurer on notice that it needs to

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make further enquiries for the purpose of revealing those material circumstances. The insurer has a remedy against the insured for a breach of the duty of fair presentation only if the insurer shows that, but for the breach, the insurer— • would not have entered into the contract of insurance at all, or • would have done so only on different terms. This is known as a “qualifying breach”. The IA sets out the remedies available to the insurer if there has a been a qualifying breach. And that depends on whether the qualifying breach was “deliberate or reckless” or neither. I’m currently satisfied from what I’ve seen that when applying for the policy, Mr U – on behalf of the policyholder – didn’t fairly represent the risk to Aviva. I’m satisfied that Aviva has fairly concluded that there’s insufficient evidence to support that the policyholder was actively trading at the time of application and that it’s fair and reasonable to conclude that was a material circumstance that Mr U didn’t disclose when applying for the policy – and one which he reasonably ought to have known, being a director of the company (as listed on the application). Mr U was asked about the VAT registration number, and he told Aviva that the policyholder wasn’t yet VAT registered. He also provided bank details for the policyholder and signed the direct debit mandate. After Mr U made a claim under the policy, in March 2025, Aviva asked for further evidence that the policyholder had been trading, including bank statements, company accounts and utility bills. I don’t think this was fair and reasonable. The policy terms say that Aviva “will be entitled at all reasonable times…to inspect your records…at our request, you will provide…any evidence and confirmations as we reasonably require to verify…the definition of policyholder is satisfied”. The definition of policyholder is: “The…business named as policyholder in the financial statement and which is actively trading in the UK” [my emphasis]. The bank statement provided by Mr U wasn’t conclusive as to whether the company was actively trading at the time the policy was entered into. And although Aviva did receive an email from the policyholder’s chartered accountant saying that the policyholder was legally trading and his firm was running payrolls for its employees, I don’t think it was unreasonable for Aviva to want further evidence that the policyholder had been trading throughout the period of insurance (including when the policy was applied for), particularly given some of the other discrepancies it had identified and the definition of “policyholder” contained in the policy terms. I’ve taken into account what Mr U has said about being an employee and not having access to the information required. However, he was named as a director on the application form and had arranged the policy on behalf of the policyholder. So, I don’t think it it’s unreasonable for Aviva to assume that he was a senior member of the policyholder and able to provide the information requested. Aviva also made the policyholder aware of the information it needed, and it didn’t provide the documentation to establish that it was actively trading from the application date. Given the definition of policyholder, I’m satisfied on the balance of probabilities that if Aviva had been aware that the company who is party to the contract of insurance – and named as the policyholder – wasn’t actively trading it wouldn’t have offered the policy. And, so, Mr U

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wouldn’t have been covered as a beneficiary of the policy (as it wouldn’t have been in place). I’m therefore satisfied that this was a qualifying breach under the IA. Aviva has said that the qualifying breach was deliberate or reckless. If that’s the case, then under the IA, it can avoid the policy, refuse all claims made under it and retain the premiums paid for it. If the qualifying breach was neither deliberate or reckless, but the policy still wouldn’t have been entered into if a qualifying breach hadn’t occurred, Aviva can still avoid the policy and refuse all claims but must return the premiums paid for it. It’s for Aviva to show that a qualifying breach was deliberate or reckless. And in the circumstances of this case, I’m not currently persuaded that it has shown that at the time of applying for the policy, Mr U – on behalf of the policyholder - knew that not disclosing that the policyholder wasn’t trading breached the duty of fair presentation, or did not care whether or not it was in breach of that duty. However, because, I’m satisfied that the policy still wouldn’t have been offered because of the qualifying breach (and the claim not covered) – and Aviva has, in principle, agreed to refund the premiums paid for the policy - I’m satisfied that how the qualifying breach has been classified hasn’t impacted the outcome of this case. The way the claim was handled Notwithstanding the above, I am currently satisfied that Aviva should’ve handled Mr U’s claim better. In September 2024, based on the information provided, Aviva authorised a consultant’s appointment, medical procedure and follow up consultation. It wasn’t until December 2024 when Mr U contacted Aviva to inform it that his medical procedure was due to take place later that month and may require an overnight stay, that it looked into whether the authorisation should’ve initially been given. That’s because the information it had on file was from a private GP, who it concluded wouldn’t have had access to Mr U’s medical history and therefore wouldn’t be best placed to know if symptoms had pre-dated the start of the policy. Aviva has admitted this oversight in its final response dated 1 May 2025. After it requested further information, an incorrect date was given by the consultant as to the onset of symptoms which meant that the condition may have been pre-existing and not covered under the policy, which confused matters. However, this distress (so shortly before the medical procedure was due to take place) could’ve been avoided if the information Aviva required had been obtained before authorisation was given in September 2024. Aviva also says that it needed to check whether there was a cosmetic element to the procedure Mr U needed, which may have affected cover. This again delayed matters. However, I’m satisfied that it had been made aware of the procedure and medical code previously and didn’t investigate this further before initially authorising cover. As a result, and because Aviva sought further investigation, it advised Mr U that if he went ahead with the medical procedure, he may be responsible for the cost. In light of this, I can under why Mr U cancelled the medical procedure – in my view, reasonably. I accept that this would’ve been confusing, frustrating and upsetting for him.

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However, shortly thereafter, I’m satisfied that Aviva did conclude that, in principle, the medical procedure could be covered. By that stage, Aviva had received requests on behalf of the policyholder for the policy to be cancelled and for the claim to be withdrawn. And the last premium it was able to collect was at the start of January 2025. As Aviva wasn’t able to collect premiums, and given that it was receiving conflicting information about whether the policyholder wanted to cancel the policy, I’m satisfied that the medical procedure couldn’t be covered. Around this time, it also started investigating whether the policyholder had been trading at the time the application was made and other discrepancies. So, whilst the medical procedure was cancelled, and Mr U didn’t have the recommended treatment, I don’t think it would be fair and reasonable to hold Aviva responsible for those further delays. They were outside of its control, and it was reasonably trying to establish what the policyholder wanted to do about the policy. It also (fairly in my view) requested information relating to the trading status of the policyholder. And - for reasons set out above – I’m satisfied that it fairly and reasonably concluded that the policy should be avoided back to inception. So, the claim wasn’t covered under the policy in any event (as it would never have been offered for Mr U to make a claim on it as a beneficiary). Aviva had paid around £615 for medical costs for Mr U, which it has now recovered. However, given the confusion that occurred before the medical procedure was cancelled, which I think would’ve been avoided by Aviva if it had undertaken the necessary investigations into whether the claim was covered before authorising the claim in September 2024, I’m satisfied it should pay Mr U £200 compensation to reflect the impact of this. Other issues Having considered Aviva’s internal guidance I’m satisfied that it has fairly and reasonably added Mr U to its known person list for two years because of suspected misrepresentation. Although Mr U had asked Aviva whether he could be transferred to a personal private health insurance policy (when receiving conflicting information form the policyholder about whether they wanted to cancel the policy early in 2025), I’m satisfied that it acted fairly by not exploring this further once Mr U had been added to its known person list. ………………………………………………………. I invited both parties to provide any further information in response to my provisional decision. Mr U responded. In summary, he asked me to consider that: • a fraud related marker (CIFAS) had been placed on him, he’d been added to the known persons list, and this was causing him ongoing harm. • £200 compensation was too low. Compensation should be between £750 and £1,500. Aviva also responded. It disagreed with my provisional decision. In summary it said: • there was other incorrect information on the application form for the policy.

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• Aviva was legally entitled to retain the premium – in line with the remedies available under the IA. • although it had identified the same service failings, compensation isn’t payable where a customer made a deliberate or reckless qualifying breach. Aviva has also confirmed that a marker hadn’t been placed with CIFAS in relation to the application Mr U made on behalf of the policyholder for the policy (in April 2024). However, it had added Mr U to its internal known persons list. 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. That includes all points made by the parties in response to my provisional decision. Having done so, I find no compelling reason to depart from my provisional findings. I’ll explain why. • Based on what I’ve seen, I’m persuaded that Aviva hasn’t placed a CIFAS marker against Mr U in relation to the application he made for the policy in 2024, on behalf of the policyholder. For reasons already set out in my provisional decision, I’m satisfied Aviva has fairly and reasonably followed its internal guidance to add Mr U to its own known persons list and that’s why it didn’t explore offering him a personal private health insurance policy. • There may have been other incorrect information on the application form, but I’ve seen nothing which persuades me that this other information ultimately impacted Aviva’s decision to offer the policy to the policyholder. Aviva was aware that a VAT number had been added for the policyholder on the application, and Mr U subsequently said it wasn’t VAT registered when further questioned about this. Aviva knew this before accepting the policy. Despite later assertions, I’m satisfied on the balance of probabilities that Mr U was a director as stated on the application form at that time. And although Mr U may have used an incorrect personal address when applying for the policy on behalf of the policyholder, Aviva hasn’t provided any compelling evidence that the application would’ve been declined if a correct address for him had been given. • I remain satisfied that Mr U should’ve told Aviva when applying for the policy that the policyholder wasn’t trading. I think this was a qualifying breach for reasons set out in my provisional decision. But I’m not persuaded this was deliberate or reckless. Particularly as the application doesn't ask whether the policyholder was trading or for any trading information (such as number of employees, turnover /projected turnover etc). • I’m satisfied that Mr U experienced distress and inconvenience for reasons set out in my provisional decision. I remain satisfied that £200 reflects the impact of these errors and that it’s fair and reasonable Aviva to pay this compensation to Mr U. • Any refund of the premiums would be payable to the policyholder. In this case I’m satisfied that Mr U isn’t impacted by this. And it seems that the premiums retained have been offset against the amount Mr U successfully claimed under the policy for initial medical costs. For these reasons and for reasons set out in my provisional decision (an extract of which is set out above and forms part of this final decision), I partially uphold Mr U’s complaint.

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My final decision I partially uphold this complaint to the extent set out above and direct Aviva Insurance Limited to pay Mr U £200 compensation for distress and inconvenience. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr U to accept or reject my decision before 15 April 2026. David Curtis-Johnson Ombudsman

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