A number of home and buildings insurance customers in the UK have felt bullied or cheated by their insurers while making claims, making the process significantly more difficult, a new investigation by the consumer champion Which? has found.
Which? has revealed concerns concerning policyholders who aren’t getting what they are entitle too by claims processes that are being “dragged out” by home insurers. The consumer champion also found that some insurance customers have reported facing adversarial treatment from claims staff when claims are being decided or settlements determined – prolonging the ordeal for those trying to find a satisfactory resolution after often distressing events.
The consumer champion submitted a Freedom of Information request to the Financial Ombudsman Service (FOS), which acts as a free mediator between companies and consumers. The data identified the 11 firms most likely to be found at fault in cases involving delays, declined claims and claims value disputes by the FOS.
Rocio Concha, director of policy and advocacy at Which?, explained the shortcomings of home insurers: “Our investigation paints a concerning picture of the home insurance market, which is clearly not providing value for money for many customers.
“When customers make claims, they should not be made to feel like a liability or face a needlessly adversarial process, which can prolong what is in many cases an already distressing experience.
“The FCA’s Consumer Duty sets out very clear expectations on how firms should treat customers. The regulator needs to investigate and ensure that insurance companies are adhering to these rules and be ready to take action against those that don’t.”
Where do the problems lie?
According to the Financial Conduct Authority (FCA), 47 per cent of the population shows at least one characteristic of vulnerability (poor health, low capability, recent negative life events and low financial resilience) and the regulator expects firms to have processes in place to support them with appropriate levels of care.
Which? has also found an increase in the number of upheld customer complaints against insurers, suggesting firms are wrongly denying customers the money they are owed – and therefore deepening their stress and worry. Forty per cent of claims made to the FOS were upheld in the customers’ favour in April-June this year, compared to 31 per cent in the same period last year.
During 2022, 99 per cent of car insurance claims were accepted, but this figure was just 68 per cent for standalone buildings cover, and 76 per cent for claims on combined home insurance policies.
Speaking to nine claims experts, Which? discovered that one reason for home insurers failing to deal with claims in good time could be down to underinvestment in staff and training, leading to undertrained and inexperienced claims handlers and increased bureaucracy.
Another issue faced by some customers is the inherent imbalance of power between the firm and claimant when it comes to negotiating cash settlements. If the claim is complex, customers may struggle to check and challenge the insurer’s conclusions or simply be unable to afford the delay to getting the claim sorted, which could force some claimants into feeling as if they have no choice but to accept a lower payout.
Which? has recommended that the FCA investigates to ensure buildings insurance companies are complying with the Consumer Duty.