Warning of insurance risks for customers of closing banks

Customers of the two major banks leaving the Irish market have been warned to check their insurance and pension policies to ensure their direct debits are not interrupted, which could cause the policies to lapse. 

The departure of Ulster Bank and KBC Bank could have implications for such policies if they are set up to pay by direct debit, according to Insurance Ireland.

Those with accounts at the two banks need to act now and provide updated direct debit mandates for all relevant insurance policies in order to ensure associated benefits are not interrupted or lapse, Insurance Ireland has said. 

Moyagh Murdock, CEO of Insurance Ireland said: “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.

“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,” Ms Murdock said. 

There are many potential impacts of lapsed policies, Ms Murdock stressed.

“For example, motor insurance is a legal requirement in order to be able to drive and the consequences of being involved in a collision when uninsured are very serious. Lapsed home insurance could have major financial implications in the event of a fire or storm.

“If your health policy lapses, there is a risk you could lose cover for pre-existing conditions and have to re-serve waiting periods. 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.

“In terms of life insurance, these policies are dependent on health at the time of underwriting. As you get older your risk increases, so if you need to take out a new policy as a result of unpaid premiums, it could be more expensive.  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.

 “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. Insurance companies have been writing to customers to remind them of the need to change their details to avoid any potential loss of cover,” MsMurdock said.

“If you discover your policy has unintentionally lapsed, please contact your insurer or broker immediately,” she added. 

“Once the updated direct debit mandate has been received, your provider will be in a position to update your policy payment information. It can take up to 14 days for these changes to be processed, so if the next payment is due within 14 days of updating with the new information, payment may still be taken from your Ulster Bank or KBC account.

“It is important therefore to discuss this timing issue with your provider when you make contact with them. Once made aware of this, your provider will then use your new bank account information for future payments so there is no interruption to your cover.

“Insurance and pensions customers who have not yet switched to a new provider should visit the Competition and Consumer Protection Commission’s website, which has published detailed information on how to complete the process. The Banking and Payments Federation Ireland also has a handy checklist and a guide for customers in vulnerable circumstances to help make the switch to a new bank,” Moyagh Murdock concluded.

Insurance Ireland also recommends that customers visit their insurance or pension provider’s website and make contact with them as soon as possible for urgent advice on the changeover to a new bank account.

 Further information is available from Ulster Bank and KBC Customer Support using the below links:

Ulster Bank Customer Support 
KBC Bank Customer Support  

The Central Bank of Ireland also has a comprehensive FAQ that provides advice for Ulster Bank and KBC customers who need to switch to a new banking provider.