2023-08-12 05:47:14
Leave our own funeral paid for and, above all, avoid complications and procedures for our loved ones when we are absent, is the main reason for taking out death insurance and the reason why it is so popular in Spain. Being able to stop worrying about the procedures related to a death and hiring a funeral service at such a delicate moment is the key in this sector. “The great contribution of death insurance to society is to facilitate the provision of a comprehensive service at a particularly complex time for familiessuch as the death of a loved one” they explain to 65YMÁS sources of unespa (@UNESPA), the employer of the sector.
However, there are economic aspects of these policies that generate disputes between the company and the insured’s relatives: discrepancies in the valuation of the sum insured and the value of the service provided; some services that were counted on and that, at the moment of truth, the family finds that they have to pay; or even the refusal of the benefit. And before death occursthere are also frequent discrepancies between insured and company: increases in the premium or problems canceling a policy or changing companies.
Despite the fact that the insurance sector does not usually appear among the first three positions of the most claimed, it is in the ‘top ten’, among the ten sectors of activity with the most claims by consumers, behind purchase and repair of vehicles, energy, banking and telecommunications.
‘2021 Claims Service Report’, General Directorate of Insurance and Pension Funds
Complaints and claims to death insurance
“While the consumer religiously pays their premium, the insurer gives an excellent deal. The problem comes when the accident occurs” he laments Miguel Ángel Serrano, Vice President of facua (@FACUA). “With death insurance, sometimes the relatives of the deceased believe they have contracted coverage that they do not have; Sometimes we find that the deceased wanted to carry out the burial under certain circumstances and the company discusses the application of some coverages. It is the daily struggle”, she assures.
When the amount of the burial falls below the insured amount contemplated by our death insurance, the insurance company must return the difference. The same as if part of the services that our policy contemplates (wake, hearse, reminders, etc.) do not take place, as happened during the pandemic, when, for example, wakes were suspended. Disagreement in the amount of this return is the main reason for claims before the General Directorate of Insurance and Pension Funds in relation to death insurance. A 34.27% of the claims before this regulator occurred for this reason. “The issue that generates the most queries and claims is related to the reintegro when the funeral does not cover the expenses for the already consolidated insured capital”, agrees Enrique Garcia, spokesman for the Organization of consumers and users (DAD) (@consumidores).
Despite this, The funeral branch is not the most conflictive within the insurance sector. just one 5,13% of the total number of claims before the regulator in 2021, the last year for which we have data, was related to the insurance industry. However, it should be noted that it was the third branch of insurance where claims grew the most in relation to the previous year, only behind multi-risk insurance (where home insurance is included) and life insurance. “It is not a very demanded activity” confirms the OCU spokesperson to 65YMÁS. “Sometimes the consumer does not have a very clear knowledge of the product itself and the claim possibilities that he has.” In this sense, it must be taken into account that those who make use of their coverage are generally not the ones who contracted it, and that stops the claims, explain experts consulted.
‘2021 Claims Service Report’, General Directorate of Insurance and Pension Funds
“In death insurance, the cases of claims that have to do with the quantification of the excess of the insured sum over the cost of the service provided by the insurer stand out, 34%” explains the DGSFP in its ‘Memory of the Claims Service 2021’. “Some of these claims are related to situations in which, because certain services included in the policies have not been provided during the period of the state of alarm and due to the restrictions imposed by the health emergency situation, the claimants understand that they are entitled to an amount greater than that offered by the insurer”, he adds.
Funeral insurance has not been regulated by the Insurance Contract Law until January 1, 2016, when the Law 20/2015, of July 14of organization, supervision and solvency of insurance and reinsurance entities. A Law that “expressly provides for the return of excess amounts insured, contemplating when the services are provided or not by the insurer; reimbursement of death insurance premiums in case of concurrence of insurance in more than one insurer; and denies the right of opposition to the extension of the contract to the insurer” he explains Legality (@Legalitas_ES). Something that, according to the legal firm, has achieved “specify non-regulated aspects and that raised quite a lot of problems”.
The increase in the premium generates unpleasant surprises
The increase in the premium is the next cause of claim by the insured before the regulator of the sector. 24.17% of the complaints before this body refer to the increases that are applied to the periodic payment for the death policy, the premium. “Increases mainly due to increase in risk depending on the age of the insured Yet the updating the cost of funeral services”, collects the Memory of the DGSFP.
At this point it is worth remembering the information requirements prior to contracting, collected for this type of insurance in article 125 of Royal Decree 1060/2015, of November 20, on the organization, supervision and solvency of insurance and reinsurance entities ”, recalls the regulator. “Thus, and among other requirements, the prior informative note must include an estimated evolutionary table of the annual commercial premiums until the insured reaches ninety years of age.” Despite this, “It is common for a consumer not to understand the technical language that these policies have, quite complicated” the vice president of FACUA tells us. “No one tells you the fine print, and whoever does is an interested party. You have to look at it. They give you a raise, you call, and they tell you it’s because they’ve improved I don’t know what, you have to ask because you don’t want that. You have to be very aware, but not everyone can be aware” Carlos San Juan complainsthe promoter of the ‘I’m older, not an idiot’ campaign, in conversation with 65YMÁS.
Refusal of the benefit
In burial insurance, the risk that is insured is as certain as life itself. Sooner or later, death is a risk, which will occur in 100% of cases. It is surprising, therefore, that there are cases in which the benefit is refused. But it happens. In fact, The third reason for complaints before the regulator, with 19% of the cases, is the rejection of the benefit“generally because the insurer understands that the health questionnaire had reservations or inaccuracies committed by the insured at the time of contracting”, explains the regulator’s claims service, as the main cause of rejection. The policyholder of a death insurance must declare to the company all illnesses or illnesses that he suffers or has suffered in previous years. In case of hiding or lying in the data provided, the insurer can leave the policy without coverage, leaving the family to take care of the burial.
If the death of an insured occurs in a country at war or armed conflict, during riots or popular riots or if it has been caused by a nuclear reaction or contamination by radioactivity or by a natural catastrophe such as a storm, hurricane or earthquake, death policies do not provide coverage either. Perhaps they may seem – and in fact are – very improbable risks. But you have to read the conditions of the policy very well, because, sometimes, they exclude coverage if the death occurs in other, not so improbable cases, such as practicing risky sports such as mountaineering, caving or scuba diving.
Also keep in mind that some companies exclude coverage in case of suicide. The issue is not trivial considering that suicide is the leading cause of unnatural death in Spain, ahead of traffic accidents and falls. Article 93 of the Insurance Contract Law establishes that, “unless otherwise agreed, the insured’s risk of suicide will be covered after the course of one year from the moment of the conclusion of the contract“. That is, if the policy does not indicate anything, the death coverage in the event of suicide will have a grace period of one year, but it is convenient to analyze all the conditions, since it can include this fact as an exclusion after that year.
Deny the provision of part of the services
Sometimes, the discrepancy does not occur because the insurance company rejects the full benefit, but because it denies part of the services included in a death insurance. This happens quite often when the death occurs outside the place of habitual residence of the insured, or when their relatives want to take the remains of the deceased to a place other than the one where they resided, such as their hometown.
In fact, the latest report from the DGSFF claims service highlights a case as a file of special interest in this regard. “The claimant complained that the insurer of his mother’s death policy had not taken charge, on the occasion of her death, nor the transfer to the town where she wanted to be buried, nor certain expenses such as morgue and cemetery” explains the regulator. The Claims Service considered that the insurance company breached the contract signed, since the clause referring to the transfer, assistance and burial service “refers to the death of the insured in any place and his subsequent transfer to his place of residence or to the place freely designated by their successors in title.
Resolutions favorable to the consumer
Despite the fact that the funeral branch is not the one that generates the most complaints and claims before the regulator, if it is the one in which these claims are substantiated. Proof of this is that death insurance, together with life insurance, presents the highest percentage of claims resolved in favor of the plaintiff in the entire insurance sector.
Of the total claim files completed in 2021, related to death insurance, in 47.02% of the cases, the report was favorable to the claimant, either by raid of the entity or because the resolution has been positive for the consumer. A percentage that is above the industry average, 32.72%.
‘2021 Claims Service Report’, General Directorate of Insurance and Pension Funds
To avoid conflicts, Legalitas recommends carefully review the policy, especially aspects such as “whether the scope of the service in terms of the transfer is only national or also abroad”; if the “sum insured is sufficient to avoid not covering all expenses”; if the “revaluation of the same so that it offers sufficient coverage in relation to the cost of the service over time”; as well as the “approximate progression of the premium based on the increase in age”.
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