UK home insurance

According to a recent investigation by consumer advocate Which?, many UK homeowners and building insurance customers have experienced bullying or deception from their insurers during the claims process, greatly complicating the procedure.

Which? has raised concerns about policyholders who aren’t receiving what they are entitled to because house insurers are “dragging out” the claims process. The consumer champion also discovered that some insurance clients have complained about receiving hostile treatment from claims representatives throughout the decision-making process regarding claims or settlements, which exacerbates the difficulty for individuals attempting to achieve a satisfying conclusion following frequently upsetting occurrences.

The financial Ombudsman service (FOS), which serves as an impartial middleman between businesses and customers, received a Freedom of Information request from the consumer champion. The information showed which 11 companies were most likely to be held accountable by the FOS for delays, denied claims, and disagreements over the value of those claims.

Which?’s director of policy and advocacy, Rocio Concha, provided an explanation of the deficiencies in home insurance: “Our research presents a worrisome image of the home insurance market, which is evidently not offering value for money for many clients.

“When consumers file claims, they shouldn’t be treated like assets or subjected to an unnecessarily hostile procedure, which can exacerbate what is frequently already an upsetting experience.

“The FCA’s Consumer Duty lays down precise guidelines for how businesses are expected to handle customers. The regulator must look into whether insurance companies are following these guidelines, make sure they are, and be prepared to take enforcement action against those that are not.

Where are the issues located?

The Financial Conduct Authority (FCA) states that 47% of people exhibit at least one vulnerability characteristic, which includes poor health, low capability, recent negative life events, and low financial resilience. As a result, the regulator expects businesses to have procedures in place to provide these people with the proper amount of care.

According to Which?, there has been a rise in the number of customer complaints that have been upheld against insurers. This suggests that customers are being wrongfully denied the money they are entitled by these corporations, which is causing them more stress and anxiety. In April through June of this year, claims submitted to the FOS were upheld in the customers’ favour in 40% of cases, as opposed to 31% during the same period previous year.

While 99 percent of claims for auto insurance were approved in 2022, just 68 percent of claims for solo building coverage and 76 percent of claims for combined house insurance plans were approved.

Which? spoke with nine claims specialists and found that underfunding of personnel and training could result in less skilled and experienced claims handlers and more red tape, which could be one of the reasons home insurance don’t process claims promptly.

The inherent power disparity between the claimant and the firm throughout the cash compensation negotiation process is another problem that some customers encounter. If the claim is complicated, clients can find it difficult to verify and refute the insurer’s conclusions, or they might not be able to afford the time it takes to resolve the matter. As a result, some claimants might feel pressured to accept a smaller settlement.

Which? has suggested that the FCA look into whether or not building insurance providers are following the Consumer Duty.