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Insurers cause distress or inconvenience in most FOS complaints

Insurers cause distress or inconvenience in most FOS complaints
Matt Browning
Written By:
Matt Browning
Posted:
30/05/2024
Updated:
30/05/2024

Insurers caused "distress and inconvenience" in two-thirds of complaints made against them last year, a consumer champion reveals.

Customers who had an insurance complaint upheld in their favour by the Financial Ombudsman Service (FOS) were either negatively impacted emotionally or experienced an unnecessary delay to an insurance claim.

In some cases, insurance firms would need to be chased for information or continually contacted to resolve an issue, according to Which?’s analysis of 8,500 final complaint decisions.

Without that persistence from customers, they could have been left without essential items like hot water or a vehicle.

That was evident in almost two-thirds (64%) of the complaints upheld in 2023 – a surge from 53% of complaints with a similar issue logged in 2019.

Four insurers caused the majority of distress issues

Insurers caused “distress and inconvenience” in two-thirds of complaints made against them last year, a consumer champion reveals.

Meanwhile, four frequent offenders were earmarked in the study by the consumer champion: Hastings Insurance Services, British Gas Insurance, British Gas Services and Advantage Insurance Company (a Hastings Group company).

Those four companies notched up a distress and inconvenience issue in over 70% of all their complaints upheld in the customer’s favour.

Hastings Insurance Services had distress and inconvenience noted in four in five (82%) of customers who successfully made complaints, while British Gas Services had the issue in 77% of the upheld complaints.

Elsewhere, customers with travel insurance complaints who had a medical issue involved in its resolution also suffered distress and inconvenience in 64% of cases.

As well as the negative experiences, avoidable delays were part of a third (31%) of the complaints too, which is lower than the industry-wide average of 32%.

The issues are particularly problematic in those travel insurance complaints with health considerations, as those customers are more likely to have already been through emotional or physical harm, the consumer champion notes.

Last year, the Financial Conduct Authority (FCA) warned insurers to improve the treatment of vulnerable customers who hold policies and have made a complaint.

The regulator said it would take action against any companies who broke the rules on additional support that those in need require.

However, tougher action is required on guilty insurers who “fail to meet requirements” in making sure claims and complaints are resolved in a timely manner, Which? believes.

‘Regulator must get tough’

Rocio Concha, Which? director of policy and advocacy, said: “Our research of consumers’ complaints to the Financial Ombudsman Service shows that, in many cases, insurance providers have caused additional distress and inconvenience to consumers – further prolonging the often already stressful ordeal.

“The FCA’s expectations and regulation are clear, yet it would appear some insurers continue to fall short of the standards expected. The regulator must get tough with poorly behaving companies and take action where necessary.”

Replies from insurance companies

Hastings and Advantage Insurance:

A spokesperson for both Hastings and Advantage Insurance said: “We take complaint handling very seriously. We see a relatively small volume of these referred to the FOS, and of these, under half are upheld in the customers’ favour, in line with or slightly better than that of most other industry players.

“The nature of these complaints, along with the length of time they have to be reviewed, means that the FOS will often look to compensate for distress and inconvenience, and although this is harder to benchmark, we understand our experience is in line with that of other industry participants.”

British Gas Insurance and British Gas Services have been contacted for comment, but had not responded at the time of writing.