Firms continue to fall short of imminent Consumer Duty standards in the UK, as Which? research reveals that three-quarters of car insurance customers whose claims weren’t paid in full were not told why.
Which? surveyed over 2,200 car insurance customers and over 1,500 home insurance customers who had made a claim within the last two years in November 2022. In March 2023, Which? also surveyed over 800 travel insurance claimants who had made a claim within the last two years.
When asked about the outcome of their claim, 14 per cent of car insurance claimants reported that their claim was either partially accepted, rejected or in dispute. This was also the case for 22 per cent of home insurance claimants and around 38 per cent of travel insurance claimants.
Fifty-six per cent of home insurance claimants and 43 per cent of travel insurance claimants whose claim was not fully accepted said they did not receive an explanation why that was the case.
Which? explained that the issue goes far beyond causing confusion for insurance customers, lacking the reasoning behind a payout rejection or adjustment also makes it more difficult for the consumer to challenge the decision or make a complaint to the financial ombudsmen.
Sam Richardson, deputy editor of Which? Money, said: “No one wants to be in the position where they have to claim on their insurance – still less have that claim be turned down.
“But not getting an explanation for why a claim hasn’t been accepted in full isn’t just frustrating – it puts you, the consumer, at a serious disadvantage.
“Claimants who don’t get the full picture from their insurers will struggle to take their claim to the Ombudsman, as they don’t have much information to prove where they and their insurer disagree.”
“Insurers need to up their game”
Which? revealed concern for customers whose claims are challenged by insurers, as vagueness from firms makes the process needlessly difficult for those who are not tenacious or confident enough to pursue clarification around claims decisions. The Financial Conduct Authority (FCA) recently reviewed how insurers treat vulnerable customers and warned firms to up their game when it comes to handling claims.
According to the FCA’s review, the number of rejected claims for home insurance reportedly rose by 57 per cent for home insurance and 24 per cent for car insurance between August and November 2022.
In 62 per cent of cases, complaints made to insurers are upheld in favour of the customer. Despite this fact, if a claimant cannot detail where they and the insurer disagree, it can be hard to make a complaint in the first place.
Richardson concluded: “Insurers need to up their game and let claimants know precisely why their claims are not being accepted in full – and as part of its new Consumer Duty, the FCA should clamp down on firms that fall below the required standards.”
