By: 7 July 2023
FCA warns insurers over treatment of customers

The Financial Conduct Authority (FCA) has urged insurers to improve their treatment of vulnerable customers and how they handle claims.

Following a review into insurer customer service after an increase in complaints about insurance claims, the FCA discovered several instances of poor performance and rule breaking.

These included lengthy complaints handling times and inappropriate settlements, as well as motor insurance customers being offered a price lower than their car’s fair market value after it had been written off, which is against FCA rules.

“Relevant firms”, as the FCA described them, have been told to correct these errors and practices, and “where necessary provide redress”.

The FCA’s warning to insurers follows Direct Line Insurance Group confirming that it is review motor loss claims settled between 1 September 2017 and 17 August 2022.

Direct Line issued the statement after press reports emerged that the FCA had ordered the insurer “to conduct a review of claims where vehicles had been written off ‘to identify any policyholders who received unfair settlements and provide them with appropriate redress’.

The statement, from Direct Line Insurance Group, said: “[We note] recent press coverage regarding the past business review of motor total loss claims which the group is undertaking. The review covers claims settled between 1 September 2017 and 17 August 2022.  An estimate of potential payments the group will make as a result of the review was provided for within the group’s 2022 financial year end claims reserves. The group does not expect the review to have a material financial impact in 2023.”

The FCA confirmed it is taking action against insurers found to have broken its rules.

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.”

Image: © PORNCHAI SODA via Canva
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