Context
In an eye-catching headline, the FCA has announced that motor insurers have changed their settlement and compensation practices after the FCA found some insurers had short-changed customers on stolen or written off vehicle claims.
Key points to note and next actions
- Although the FCA indicates that some 270,000 motorists “are expected to receive” £200m in compensation for historic claims that were underpaid, £129m has already been paid to almost 150,000 customers.
- A more accurate headline might have been that a further £71m will be paid to a further 120,000 customers (an average of just over £590 each).
- In December 2022, the FCA warned insurers not to undervalue cars and other insured items when settling insurance claims and set out its expectations for firms when handling claims.
In March 2024, the FCA published a multi-firm review which identified shortcomings in insurers’ valuations of vehicles. It engaged directly with firms with issues and committed to investigating further. The review included 12 firms and the regulator engaged with a further 6 firms, covering around 90% of the market.