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FCA claims thematic review workshop

This week the FCA held a workshop to discuss their initial findings of its thematic review on household and travel insurance claims handling.

The FCA said they would not be proposing any new requirements or rules changes for firms in this area and they had found that on average 65% of household insurance customers were satisfied with the way their claim had been handled; and 64% of travel insurance claimants were satisfied. Those with successful claims had a much higher satisfaction rate.

They also found no evidence of attempts by firms to deny valid claims or to squeeze settlement costs, nor did they find evidence of deliberate attempts to slow claims down, with any delays instead being the result of poor processes or management.

The FCA has identified for further discussion some areas where improvements will further increase customer satisfaction. These include:

  1. How in-bound claims calls are recorded and used - the FCA found that many in bound calls were from consumer trying to understand their policy and asking questions about their cover which led them to look into how insurers were recording these calls and how they used this information in the future. This is focused on household claims.
  2. The ownership of a claim and communication with clients whilst it is being progressed - the FCA found there was reasonable performance, but that there was a high level of detriment/frustration to a consumer if there wasn't good communication or ownership of a claim. Both types of insurance are included in this focus.
  3. Management of supply chains in household insurance claims -this was quite a challenge and there was a number of instances found where things had gone wrong for example poor workmanship; delays; incorrect instructions. This is focused on household claims.
  4. How medical conditions are dealt with in travel insurance - this related to disclosure of pre-existing medical conditions and what the consumers understand by medical condition and the other medical terminology used.
  5. Handling of claims with long chains of delegation - the FCA saw many long chains of delegation, and are concerned about how much attention is given to consumer information.
  6. Clarity of product documentation - consumers spoke of having key facts document that were 16 pages long and that some of the terms and conditions were difficult to understand and consisted of a lot of small print. The FCA did acknowledge the challenge in getting the balance right between the regulatory requirements and informing the customer.
  7. Other issues included the number of claims withdrawn and why (ie: travel: too much information required; household: impact on future premiums); the use of the customer's own tradespeople and matching sets and the replacement of those items as a whole.

The FCA want the insurance industry to reflect over the next 6 months what these findings mean and want senior figures in firms to look at what it means for their business model. Claims will also form part of Pillar 1 supervisory work.  They are also going to do some work on travel insurance looking at a range of issues including communication to customers, point of sale and renewal disclosure, good practices and model wordings and expressing terms and conditions in a language that is easy to understand. The ABI will engage with the FCA to get more information about this work and how they will take it forward.

The final report will be issued in early May.


The Review was announced in May 2013 with 10 insurance companies deliberately selected to participate in the review, providing a mix of large and small insurers, Lloyd's managing agents and some offering both products.  It was to investigate to what extent firms were putting consumers making claims at the heart of their businesses looking specifically at whether payments were being made in a fair and consistent way when they are due, were companies acting ethically towards their customers, how customers were kept informed during the claims process and if the claims culture was fit for purpose in a modern world.

This was a very comprehensive review with the FCA carrying out extensive consumer research, holding senior management interviews, visiting claims operations, sitting in on 'live' household claims and a comprehensive review of emergency response in travel insurance.


Last updated 01/07/2016