Context
In December 2022, The FCA issued a questionnaire to a selection of the largest general insurance firms to assess whether they were meeting the expectations it set out in its Dear CEO letter (September 2022).
The FCA has now reviewed how home and motor insurers are supporting customers in financial difficulty and handling claims. It has published examples of good practice and areas where firms need to improve, particularly on the treatment of vulnerable customers and claims handling.
Key points to note
Firms were assessed against three key expectations outlined in the Dear CEO letter, to understand how they were:
- providing appropriate support to customers in financial difficulty
- ensuring consumers get access to fair value products
- ensuring claims are handled promptly and fairly
Among the key findings, the FCA has identified:
- Cancellations due to non-payment of premiums are low and stable.
- The proportion of policies paid by monthly instalments also stable.
- Some examples of lengthy claim handling times:
- Increasing length of time it takes to agree settlement terms with third parties and close all aspects of a claim.
- Settlement times for home insurance customers can be lengthy for certain more complex claims (e.g. flood and subsidence for Home) and for bodily injury for Motor.
- Delays for motor insurance customers at claim stage due to sector-wide challenges around a lack of available courtesy/hire cars and the supply of car parts.
- Volumes of claim complaints are increasing.
- The number of rejected claims are increasing.
- There is a minimal increase in customers abandoning claims, which the FCA will be keeping an eye on.
- Some firms were unable to demonstrate how they effectively identified vulnerable customers.
Next actions
None – for information and awareness.