Insurance firms are fair - watchdog


Spiral back Insurance Policy document with pen and notepaper.

There is "no evidence" that people claiming on household and travel insurance policies are coming up against systematic attempts by firms to wriggle out of valid claims or squeeze settlement costs, the City watchdog has found.

The Financial Conduct Authority (FCA) said a review into the way claims on these types of policies are handled has shown that around two-thirds of claimants were happy with how they had been dealt with.

It said that any delays to customers' claims being processed are likely to be down to poor processes or management, as the FCA found no deliberate attempts by firms to drag their heels.

Some 65% of household insurance customers were satisfied with the way their claim had been handled, as were 64% of travel insurance claimants, the FCA said.

The regulator said it has "uncovered no evidence of systematic attempts by firms to deny valid claims or to squeeze settlement costs".

The FCA launched the review last spring and is finalising its findings before publishing a full report in May. It is discussing its initial findings with firms, trade bodies and consumer groups.

It said while these findings are "broadly positive" and it is not proposing any rule changes for firms, there are several areas where more improvements will increase customer satisfaction.

These include firms looking again at the way that medical conditions are treated in travel insurance policies, how they keep in touch with customers while a claim is being progressed and how incoming calls are recorded and used.

FCA chief executive Martin Wheatley launched the investigation in a speech to the British Insurance Brokers' Association conference in May last year, in which he quoted figures from consumer group Which? saying that 64% of complaints about insurance are directly related to claims.

He said last year: "I think it is right to address public concerns that imply policy holders might be facing delays; poor customer service; or having perfectly valid claims unfairly declined.

"Very often, we are talking about enormously stressful periods in people's lives. Touchstone moments. Someone taken seriously ill on a family holiday; a house burgled; a property flooded."

Mr Wheatley said he was launching the review to "quickly determine - for the sake of both the insurance industry as well as its customers" whether there was a case to answer.

The Financial Ombudsman Service (FOS), which resolves disputes between financial firms and their customers, gets about 45 complaints from consumers a week from people who have had trouble with travel insurance policies and 40 a week from people with contents insurance gripes.

It said common complaints about travel insurance that it sees include insurers rejecting claims when a holiday has been cut short, problems with claims on lost or delayed luggage and issues arising from medical claims.

The service also often hears from consumers who are complaining because they have tried to claim for what they believe to be damage on their contents insurance, only to find this is rejected because the insurer says it is "wear and tear".

It also often sees disputes arising because the consumer has not told the insurer they have "upgraded" an item in their home.

The ombudsman service upholds over half (53%) of travel insurance cases and two in five (39%) contents insurance disputes in consumers' favour.

The service said people should bear in mind that the cheapest policy is not necessarily the most suitable and it could end up costing them more money in the long-run if they later need to make a claim.

To help avoid disputes arising, it said people should make sure they read their policy documents closely to check what is covered and keep a record of conversations with their insurer.

A spokesman for the Association of British Insurers (ABI) said the body is pleased with the FCA's general findings.

He said: "Millions of households and businesses rely on the financial protection of insurance, with insurers customers protection insurance provides, with insurers paying over £31 million to customers every day for motor, household and travel insurance claims alone.

"The recent floods and storms which led to over 17,500 claims from customers is further evidence of the vital role insurance plays in people's everyday lives.

" We will continue to work with the FCA in their review and await the publication of their full report in May."

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