The consumer champion found that some home insurers are accepting as few as one in three claims, causing customers to endure “nightmare ordeals” to get their properties fixed following fires, flooding and other traumatising experiences.
Which? experts looked at Financial Conduct Authority (FCA) data on the percentage of customer claims firms accepted and claims complaints as a percentage of all claims, over a two-year period.
Which insurers are most likely to reject claims?
It found that six providers – AA, Esure, EUI, Lloyds, Rentokil and Urban Jungle – all had a claims acceptance rate of less than 55%.
Lloyds Insurance Group had a claims acceptance rate of 30-35% for buildings-only policies, meaning two in three prospective claimants received nothing following their claim. Of all the claims Lloyds received, some 15-20% led to complaints.
Esure and Rentokil both had a claims acceptance rate of 40-45% for buildings-only cover. Esure had a claims complaints rate of 10-15% and Rentokil had a claims complaints rate of less than 5%.
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Two providers – AA and EUI – had a claims acceptance rate of 50-55% for buildings-only products. Worryingly, 25-30% of all claims the AA received resulted in a complaint. For EUI, this figure was 15-20%.
Urban Jungle’s claims acceptance rate for combined buildings and contents cover was 50-55%. Claims complaints as a percentage of all claims were 10-15%.
Claims acceptance rates getting worse
The FCA data also showed that the claims acceptance rates of at least half of the firms offering buildings-only or combined buildings and contents policies appeared to worsen between 2022 and 2023.
For combined buildings and contents policies, the overall percentage of claims accepted in 2023 was 72%, down from 76% in 2022.
For car insurance, the percentage of claims accepted was 99% in both 2022 and 2023. For contents-only home insurance cover, the percentage of claims accepted in 2023 was 77% – slightly higher than the 76% of claims accepted in 2022.
For buildings-only cover, the percentage of claims accepted in 2023 was 63%, down from 67% the year before.
Home insurance claims among the most likely to be turned down
Of 33 general insurance products shown in the data, home insurance products are among the four worst when it comes to paying out claims.
While home insurance claims can often be more complex in nature than with other forms of cover, Which? believes these claims statistics show that far too many home insurance customers are being failed by their cover.
The consumer champion said that whether claims are rejected because of unfair decisions, or because customers do not understand what they were covered for, both suggest issues with how firms are meeting regulatory requirements.
New regulations
The FCA’s Consumer Duty, which came into effect in July 2023, requires firms to deliver good outcomes for their customers and for vulnerable customers to receive outcomes that are at least as good as those of other customers.
The Consumer Duty also requires firms to design products and services that meet the needs of consumers and sell them to those whose needs they meet.
The FCA has also recently published a review into how well insurers were delivering good outcomes for their customers and found that, in many instances, firms were not meeting their regulatory obligations.
Rocio Concha, Which?’s director of policy and advocacy, said: “When home insurance customers take out a policy, they don’t expect to have to claim – let alone face a protracted ordeal with their insurer just to get justice.
“That customers who’ve been through hellish ordeals, such as a fire in their house, face lengthy battles with their insurer just to have their claim accepted is extremely concerning.
“The FCA’s requirements on insurers have been clear for some time: firms must deliver good outcomes for customers, especially those in vulnerable circumstances. Our research suggests that some firms aren’t following these requirements – and the regulator shouldn’t hesitate to take action against those falling short.”
