Pet owners left waiting for compensation

Pet owners facing crippling vet fees after their insurer pulled out of "lifetime" cover over a year ago are still waiting for compensation.

The wheels of justice grind slowly. Almost 18 months after her insurer abruptly withdrew her “lifetime” pet insurance, Fiona Delaney has been trying to get redress for her four-year-old Munsterlander dog, Paddy.

As reported by the Telegraph , Ms Delaney was one of hundreds of pet owners who were left facing crippling vets' fees, while her case was heard by the Financial Ombudsman Service (FOS). The problem involved the sale of so-called “lifetime” pet insurance.

This was sold by both Halifax and Lloyds as well as Thistle Insurance, the company behind the PetGuard policy bought by Ms Delaney. With these insurers withdrawing from this market completely, owners found themselves unable to get comprehensive cover for their pets, as any new insurer would automatically exclude any existing health problems.

However, these policyholders would have had cover for such treatments, on renewal of their original pet insurance plans.

Last November the ombudsman published a final “test” case on this issue. This stated that insurers should pay for veterinary treatment for such existing conditions, up to any set limits specified in the original policy.

In addition, the ombudsman said he expected the insurer to reimburse any such fees already paid, with 8pc interest on top. While Ms Delaney was initially delighted to see this ruling, it has proved to be a hollow victory so far.

Three months later and Ms Delaney as well as many other PetGuard policyholders still hasn’t received a penny, and with Paddy needing specialist treatment her vet bills are escalating.

The FOS said this case involved a Halifax customer, but the FOS contacted other insurers including Thistle Insurance stating they should comply with the guidance issued, or come back with an alternative policy.

Ms Delaney said: “This seems a completely unsatisfactory state of affairs as despite chasing the insurer on a number of occasions I’ve yet to hear a thing.”

In the meantime Paddy has suffered “a severe flare up of his ongoing dietary problems”. As a result he has been referred to the Royal Veterinary College Queen Mother Animal Hospital for specialist investigation and treatment.

“The cost of this latest treatment was already in excess of £1,000, and this is likely to rise considerably now he has been referred to this specialist unit.”

The FOS said it did not set a deadline for such responses. It said in many cases publishing such guidance led to other complaints that might not necessarily be against the same company, being settled quickly.

“Wherever possible we do try to resolve cases informally, however on this occasion it looks as though these attempts were unsuccessful so a formal letter was sent to the business.”

It said Thistle has until the end of this week to respond. If no answer is forthcoming, Ms Delaney’s case is then passed to the lead ombudsman for a formal judgment.

However, the FOS could not say how long this might take, as the ombudsman would have to consider the specifics of her cases, and would invite a response from the company concerned, before making a final and legally binding judgment.

A spokesman for Thistle Insurance refused to comment on why it had taken so long to settle this issue particularly as it is now almost a year since Lloyds proposed a solution.

In a statement, the company said: “Ms Delaney’s complaint is the subject of an ongoing appeal with the Financial Ombudsman Service and Thistle Insurance Services is unable to act until that process has concluded. We anticipate that Ms Delaney will shortly receive a communication from the FOS with a view to finalising this matter.”

A spokesman for the ombudsman said while they couldn’t penalise companies they felt were dragging their heels, they could award additional damages for delay or distress caused.

Last year Lloyds Banking Group under pressure from regulators, the media, and a customer backlash agreed to offer new insurance policies to 4,000 pet owners, after it stopped offering this cover under both the Halifax and Lloyds TSB brands.

Although it insured almost 30,000 pets, around 25,000 were thought to be unaffected by its decision to pull out of this market, as these animals were not suffering from any ongoing health conditions, so should be able to get comprehensive cover elsewhere.

Tony Boorman, the chief ombudsman, has previously expressed concern about the way these policies were sold. Like most car insurance or home insurance, pet cover is essentially an annual policy that is renewed every 12 months. But many companies, including Lloyds and PetGuard, marketed these products as “lifetime plans”.

Typically these were more expensive than budget policies, but effectively enabled policyholders to “reset” annual limits on renewal, so giving people continuous cover for chronic and long-term conditions, such as diabetes, skin complaints, or complications arising from a previous accident.

It was standard proactive within the industry to refer to this type of pet insurance as “cover for life”. Of course problems arose when insurers stopped offering this type of insurance, usually because it was not proving to be as profitable as they had hoped.