The regulator must show its teeth and start taking tough enforcement action against insurers that are failing to meet their Consumer Duty obligations says the Consumer Group which as it launches a campaign to fix the broken insurance market
Its analysis found shockingly high claims rejection rates and an avalanche of complaints about appalling customer service and claims handling.
Its latest research highlights the pitfalls consumers face when buying insurance, where limited customer understanding of policy limitations, a lack of clear information about exclusions and confusing or difficult to answer questions can contribute to claims later being rejected, with devastating consequences.Which? believes many insurers are failing to meet their legal obligations under the FCA’s Consumer Duty, which requires firms to focus on customer outcomes by ‘putting themselves in customers’ shoes’ and proactively take action to address poor outcomes.
Which? is calling for the FCA’s ongoing review of insurers’ claims-handling arrangements to lead to action to address the alarmingly high claims rejection rates consumers are experiencing with home and travel insurance.
This review should lead to action against firms that have not sufficiently addressed persistent issues that are driving high claims rejection rates. This could include not meeting existing requirements to sell products to meet customer needs and the reasonable expectations of their target market, and not supporting customer understanding of key terms and exclusions.
Rocio Concha, Which? Director of Policy and Advocacy, said:
“Too many people are having their claims rejected and enduring appalling treatment at the hands of insurance companies. The impact on their finances and on their mental and physical health can be devastating.
“Our latest research shows how many of the problems people face with insurance can be traced back to a flawed sales process, where firms are failing to support customer understanding of complex terms and exclusions which can sow the seeds for disaster.
“The FCA has the power and responsibility to step in and protect consumers. The regulator must show its teeth and start taking tough enforcement action against insurers that are failing to meet their Consumer Duty obligations, or to comply with FCA insurance rules or wider consumer law.”
