Insurance
Watchdog calls on insurers to give more help to vulnerable customers
Guest Author:
Peter TabernerHome and motor insurers must improve the treatment of their customers, particulalry those with vulnerabilties, according to a report from the financial watchdog.
Home and motor insurers must improve the treatment of customers, a review by the Financial Conduct Authority (FCA) has found. The review was carried out as there has been an increase in complaints over insurance claims, and the FCA uncovered that handling times lengthened and that there have been inappropriate settlements awarded.
For example, the regulator discovered in its investigations that motor insurance customers were being offered lower than a fair market price once a vehicle was written off. The firms in question have been told by the FCA that they must provide their customers with the correct level of compensation.
It was also found that customer outcomes were not being monitored extensively enough. Some firms also failed to recognise their more vulnerable customers who were in need of additional support. The FCA has confirmed that it will take action against any firm that has broken its rules.
Rejected claims rising
Rejected claims are also on the increase in both the home and motor insurance sectors. Over a four month period last year between August and November, it was discovered that rejected home insurance claims had climbed up by 57%. Motor insurance claims that had been turned down had risen by 24%.
However, insurance firms said that this happened as may customers made claims for items they were just not covered for. For example, claims were made for accidental damage when extended cover was not part of an insurance policy. In response to such situations, firms said the more education over policy options at the point of sale would be the way forward.
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Good practice found in review
The FCA dis note soem positive moves by insurers such as the way claims are being processed. Firms were showing greater patience, waiving fees or offering payment holidays, plus setting up customer support hubs. Website sections that are specifically designed to help the most vulnerable customers in both financial and non-financial matters have also been designed. Another instance of good practice the FCA discovered was the use of voice analytics and specialist training to help identify vulnerable customers.
Alongside the review the FCA has also finalised new guidelines, with the aim to provide further clarity about what firms should do for customers in financial difficulty.
Sheldon Mills, Executive Director, Consumers and Competition at the FCA, said: “Timely and fair claims handling is especially vital during the cost of living squeeze. While we have seen many firms treating their customers correctly, we found too many examples of customers not receiving the service they’re entitled to. Where we found issues, we’ve told firms to put them right. We’ll be monitoring them to ensure they do.”