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The double life of insurance firms

"Good news" has become an obsession of the insurance industry and in particular for the Life Insurance Association, one of its trade organisations.

The LIA has just issued a glossy brochure, entitled Living Life to the Full, which laments that despite paying out £30bn to policy-holders in 1993 and £13bn in pension schemes, the industry still gets a bad press.

"We know as well as anyone that `shock-horror' stories sell more newspapers, but we believe the media have a responsibility for balance," it says, and a report headed "There can be life after death" tells of Ben, the breadwinner in a young family, killed before completing the life assurance associated with a mortgage he was arranging.

"Nevertheless, the death benefit under the proposed policy was paid," soothes the brochure, "A letter to the household name company from Ben's parents expressed appreciation for their compassionate and generous help." Media balance requires this newspaper to recall a similar case study last year in which a relative had to resort to Laurie Slade, the Insurance Ombudsman, to force the company to pay out, and ended up with only half the sum assured.

As Mr Slade said in his annual report, the person who died had applied for life assurance. The company wanted more information on medical problems and eventually refused cover. But the sales agent was ill and did not deliver the refusal until after the man had died. The company then refused to pay, although the man's wife said she had contacted the agent before the death and been told the policy was in force. Her son said the agent had also asserted the claim would be paid anyway.

The agent said his remark about the policy meant only that the man was covered for 30 days from the date of the proposal, as in the policy conditions. Mr Slade suggested a 50 per cent pay-out, which was made. It is not known whether the sales agent was an LIA member nor whether the insurer received any grateful correspondence from the dead man's family.