Many UK claimants are unaware of the reasons for partially declined insurance claims, according to a Which? study.
According to a Which? study, three-quarters of vehicle insurance customers whose claims weren’t fully settled were not informed of the reason, demonstrating that businesses continue to fall short of the UK’s impending Consumer Duty criteria. In November 2022, Which? polled more than 2,200 car insurance customers and more than 1,500 house insurance customers who had recently filed a claim. Over 800 people who had recently filed a claim for travel insurance were polled by Which? in March 2023.
14% of vehicle insurance claimants who were asked about the outcome of their claim said that it was either partially accepted, refused, or in dispute. This also applied to 22% of homeowners insurance claims and 38% of travelers insurance claimants.
56 percent of house insurance claimants and 43% of travel insurance applicants who had their claims partially denied indicated they had not been given an explanation.
According to Which?, the problem goes beyond simply confusing insurance customers because it makes it more challenging for them to appeal a payout rejection or adjustment or to file a complaint with the financial ombudsmen.
No one wants to be in a position where they must file an insurance claim, much less have that claim denied, according to Sam Richardson, deputy editor of Which? Money.
But failing to receive an explanation for why a claim wasn’t fully approved is more than simply annoying; it puts you, the customer, at a significant disadvantage.
Claimants who don’t receive the complete story from their insurers “will find it difficult to take their claim to the Ombudsman because they don’t have much information to prove where they and their insurer disagree.”
“Insurers need to step up their game”
Customers whose claims are denied by insurers are a problem, according to Which?, since firms’ ambiguity makes the process unnecessarily tough for people who lack the tenacity or self-assurance to demand clarification of claims judgments. The Financial Conduct Authority (FCA) recently examined how insurers handle consumers who are vulnerable and issued a warning to businesses to improve how they handle claims.
Between August and November 2022, the number of home insurance claims that were denied increased by 57%, while that of car insurance claims increased by 24%, according to the FCA’s investigation.
Customer complaints to insurers are upheld in favor of the customer in 62% of situations. Despite this, it might be challenging to file a complaint in the first place if a claimant cannot specify where they and the insurer differ.
In his conclusion, Richardson stated that “Insurers need to step up their game and let claimants know precisely why their claims are not being accepted in full – and as part of its new Consumer Duty, the FCA should clamp down on firms that fall below the required standards.”