Another British couple have been told by Aviva that their life insurance policy is no longer valid because the firm can no longer operate in France due to Brexit.
Kathleen Allen, who lives in Maine-et-Loire in western France, took out the insurance on husband David Irvin’s life in 1991 while living in the UK to be certain she could pay for his funeral when the time came.
Her monthly premiums started out at £29.50 but increased over the years.
She was most recently paying £44 per month and would have been entitled to £14,270 in the event of her husband’s death. Instead, Aviva has offered her a £600 surrender value.
It was a ‘whole of life’ policy, meaning its premiums are reviewed every five years to check whether increases are needed to continue providing cover.
Last December, Aviva sent Mrs Allen a letter saying it could not continue her policy as French law no longer allowed it to increase premiums or reduce the death benefit.
The letter concluded: “After three months, we will automatically cancel your policy and any surrender value would be payable.” Then, in April, another letter informed her that her policy benefits had ceased.
'After 31 years, you don’t expect this to happen'
“After 31 years, you don’t expect this to happen,” Mrs Allen said.
“I’ve never missed a payment. It feels like robbery. It’s like we’re little people and they’ve chucked us aside. You wonder why the law is on their side.”
Aviva told The Connexion: “Under French law, it’s no longer possible to renew, extend or modify existing insurance contracts without regulatory permission to conduct insurance business in France. If changes need to be made to a policy – for example, following a review – there is no alternative but to cancel the policy.”
Read more: Britons in France threaten to sue Aviva UK over life assurance losses
Mrs Allen, 81, contacted the UK’s Financial Ombudsman Service. An investigator looked into the case and concluded that the insurance provider had acted fairly.
“As the UK has left the EU, the laws and regulations have changed and Aviva have had no choice but to comply with them,” the investigator wrote in a letter. He also found the £600 surrender value to be fair.
He said the policy was in no sense a savings account. Most of the value of the premiums went towards financing the potential life cover pay-out, rather than accruing a cash-in value for the policyholder.
Worries of covering funeral costs
Mrs Allen stressed that her main worry was that there would not be sufficient funds to pay for funeral costs.
The Connexion has spoken to several British readers who received similar communications from Aviva.
We first reported in May that reader Vivien Reynolds and husband Peter had been warned the insurer would have to cancel their policy, due to pay out £47,155 on first death.
Read more: Brexit cost couple £47,000 on Aviva first death life insurance policy
Brexit brought the end of ‘financial passporting’ for UK financial firms, whereby business can be freely conducted in other EU countries rather than being subject to national rules in each EU state.
In January 2021, French regulator ACPR warned firms: “Insurance contracts agreed with British insurers who have not taken measures to continue operating in France remain valid and must be faithfully executed until their term.
“The insurer must inform policyholders residing in France, by lettre recommandée or recommandé électronique, within 15 days of the UK leaving the European Union, that they will no longer be able to issue new premiums or renew the contract. They must state the date when cover will end.”
Some financial firms sought solutions, including setting up branches on the continent.
Read more: Advisory service resolves Britons financial problems in France
Last autumn, Aviva sold its business here to a French group, but the company said it would not have been possible to transfer policies to the new business as this was run completely separately.
Meanwhile, one policyholder, retired soldier Teddy Bagnell, 88, said he would sue the firm if they tried to cancel his life insurance, saying in his view there was nothing in his policy that allowed for this.
Mr Bagnell said he was frustrated by his lack of political representation as a French resident. “If I was a Frenchman living in London and had the same problem, I would be on to my MP [for overseas residents in Northern Europe], who would get the government involved,” he said.
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