Mr P came to MFSA in 2006 with a rather complicated case relating to two insurance policies he had purchased, one in the late 60s (a whole of life policy) and another, an endowment policy, in the late 70s. Mr P brought a pack of documents to MFSA, some of which unopened, of communication he had received from the two insurance companies. Mr P, who did not read or understand English, was unable to recall from whom he had purchased the policies.
The first policy denominated in sterling was issued by a UK company. There was no record how premium was paid to the company and it was not clear whether the policy was still effective. The second policy bought in the late 70s, was an endowment policy in Maltese lira issued by another UK company. Mr P was under the impression that this last policy was to mature on his 61st birthday and would pay out a hefty amount. He arranged with his bank for the annual premium to be paid by standing order from his savings account every October, to an account held by a local company which seems to have been the same company which sold the policy to Mr P.
The second policy matured in 2006 and a relative of Mr P wrote to the UK company asking for the money. The company replied saying that the policy had been paid up since 1981. Neither Mr P nor his anxious family were aware of what paid up meant. From the bundle of documents, it transpired that in 1980 and 1981 the UK company had sent a number of reminders to Mr P requesting payment of premium but Mr P did not give them much notice possibly because he assumed the standing order instructions would cater for that.
The matter became complicated even further when the local bank provided the Unit with copies of correspondence relating to the standing order. Sometime after 1981, the UK company merged. The original standing order instructions were amended in the mid-1980 in favour of this newly merged company. A new bank account was provided to the bank. Some five years later, the bank received a letter from the insurance company requesting a clarification about the annual premium as “the name and policy number do not agree to our records”. The bank, possibly acting on instructions from Mr P, confirmed that the policy number had been changed to that of the first insurance policy (the whole of life policy). Whether that was correct or not was anybody’s guess. Ten years after, the UK company appointed a local entity as its “run-off” agent.
In the meantime, the annual premium continued to be deducted from Mr P’s savings account without it ever reaching the UK insurer.
The local company in which the original standing order instructions had been paid for a span of around 12 years had been liquidated. Its liquidator had died some time after the company was declared defunct.
A substantial amount of premium (around €2,043) was unaccounted for. However, a further €1,770 (representing 14 years of premium) was traced to the account of the entity which was appointed as the run-off agent. The entity never questioned why the bank was paying this amount. It so happened that the bank had changed its systems and the details of Mr P’s policy in the standing order went missing. The entity managed to locate all the funds paid which had been allocated to a suspense account as “unclaimed”.
After various discussions with Mr P, his relative and even the Consumer Association, payment of the amounts held by this entity was made with compound interest. Regrettably the value which accrued on the endowment policy was rather minimal and no trace of any value on the whole of life policy could be found.
After 27 years, the standing order was stopped in 2006, the year Mr P celebrated his 61st birthday.