Insurance policies could be impacted by exit of banks, Insurance Ireland warns
Insurers have urged customers of Ulster Bank and KBC Bank Ireland to be aware of the risks for their insurance and pension policies posed by the departure of the two lenders.
Insurance Ireland said customers of the banks whose policies are paid by direct debit need to be sure to update the payment details and mandates to prevent them from lapsing or becoming interrupted.
The warning comes ahead of the first tranche of Ulster Bank accounts facing being frozen from Friday onwards.
“In order to ensure that policies continue uninterrupted, Ulster Bank and KBC customers need to act as a matter of urgency and update direct debit mandates for all their insurance products to their new bank account,” said Moyagh Murdock, Insurance Ireland’s chief executive.
“If a policy lapses, customers are at risk of losing cover, so it is important to act now so you don’t miss out. It may not be possible to reinstate a lapsed policy with the same terms and conditions.”
“It may have to be treated as a new policy, which means consumers risk losing benefits built up over time.”
As an example, Insurance Ireland pointed out that it is a legal requirement to hold motor insurance if driving a car on a public road and if someone is involved in a collision without cover, the consequences could be very serious.
It also referred to the risk of a house incurring storm or fire damage without cover being in place.
“If your health policy lapses, there is a risk you could lose cover for pre-existing conditions and have to re-serve waiting periods,” Ms Murdock said.
“You could also be liable to additional Lifetime Community Rating loading charges, which can be quite significant if you fail to take out health insurance 13 weeks after the policy is cancelled.”
The organisation also warned that those in receipt of pension payments may see them interrupted if their account is frozen.
“Customers who are in receipt of a regular payment from a provider, for example, a pension payment, will also need to contact their insurer or pension provider and supply updated bank account information so that the payments can continue uninterrupted,” said Ms Murdock.
“Many insurance and pension providers have specific webpages and online forms on their websites to assist their affected customers and help guide them through the transfer process for their direct debits.”
She added that if a person discovers their policy has unintentionally lapsed, they should contact their insurer or broker immediately as it can take up to 14 days for an updated direct debit mandate to be processed.