The Financial Conduct Authority is widening its planned work to raise standards in the home and travel insurance markets, after receiving a super-complaint from Which?.
Although nearly eight in ten consumers who make an insurance claim say they are satisfied with how it is handled, the regulator says there is still “room for improvement”. Around 30% of policyholders report that they lack sufficient information to properly compare the quality of different insurance products.
Over the coming year, the FCA plans to focus on improving claims handling by assessing firms’ customer service practices, how effectively services are delivered, and the way insurers manage third parties involved in handling claims.
The regulator also wants to strengthen consumer understanding of what insurance policies do and do not cover. This will involve analysing the various ways firms sell their products and communicate key information to customers.
Since its review of the home and travel insurance sectors in July, the FCA has already taken a number of actions. These include opening two enforcement cases, preventing one firm from trading until identified issues are resolved, commissioning three independent reviews of firms’ systems and controls, and requiring three senior managers to commit to fixing problems and consider whether customer redress may be necessary.
In a statement issued today, the FCA said it uses “the best tools available to us to deliver the fastest results for consumers”, adding that this does not always involve enforcement action or market-wide studies, which can take longer to complete.
Graeme Reynolds, director of competition and interim director of insurance at the FCA, said: “We welcome Which? shining a light on issues we identified in home and travel insurance.
"We’ve set out more detail on the action we’ve already taken to fix problems, and we’re expanding our existing workplan to improve the claims process and consumer understanding of their cover.
“We’ll be monitoring consumer outcomes and will continue to hold firms and their senior leaders to account for making improvements, to help build trust and make sure people get fair value insurance”.
