Insurance Ireland, the industry lobby group, has warned customers of Ulster Bank and KBC Bank Ireland of the potential risks to their insurance policies if direct debits lapse as the two banks prepare to start freezing current accounts as they retreat from the Irish market.
Ulster Bank started in April to give customers six months’ notice to find another home for their current and deposit accounts. It subsequently extended the deadline for the first wave of affected customers and will start freezing accounts from this Friday, initially focusing on accounts that are inactive or where there are fewer than five transactions a month.
While KBC Bank Ireland has agreed to sell its deposits to Bank of Ireland as part of a deal that also involves the transfer of its €9 billion of performing loans, the Belgian-owned bank will start freezing current accounts from December.
Insurance Ireland said on Wednesday that customers of 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”.
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“If a policy lapses, customers are at risk of losing cover, so it is important to act now so you don’t miss out,” said Moyagh Murdock, chief executive of the industry body. “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.”
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Insurance Ireland highlighted, for example, that 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, it added.
“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.”
In terms of life insurance, these policies are dependent on health of individuals covered 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,” Ms Murdock said. “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. If you discover your policy has unintentionally lapsed, please contact your insurer or broker immediately.”
