Insurers must do better!
The deal for claimants may now improve, but here’s how to help yourself, says Paul Lewis
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If you make a claim on your home or travel insurance there is a one in four or five chance it will be turned down. The Financial Conduct Authority, which regulates the industry, investigated it in the summer and revealed that 27% of claims on home policies are turned down, as are 21% of travel claims. But despite finding considerable failings in the way insurance was sold and claims were handled, its report basically just told insurers they must do better.
Now, the consumer organisation Which? has told the FCA itself to do better. Using its statutory powers it has made what’s called a super-complaint about how customers and claims are dealt with in home and travel insurance. As a result, the FCA announced before Christmas that it would expand its work to improve standards in both these markets.
The Which? complaint said “these markets are failing consumers” – not just in rejecting claims but because they routinely treat customers poorly during the claims process. It also says that the terms and conditions are “unfairly disadvantageous to consumers.” In many cases, claims were being rejected for reasons customers may not have been aware of. Which? accuses the industry of causing customers “financial and emotional harm”, and the FCA of “a pattern of consistent failure… to meet its statutory consumer protection objective.”
Strong words, which may lead to improvements in the future. Meanwhile what should the 32 million people with home contents insurance and 28 million who have travel insurance do? First, beware the cheapest: it may not cover what you want. But also beware unnecessary add-ons such as legal expenses. Not only is that seldom needed; FCA figures show four out of nine claims are rejected. Make sure the sum insured in your home contents policy is adequate to replace your items new. If the total is inadequate your claim may be scaled down even if you just lose one item. Check that phones, bikes and jewellery are covered when you are not at home. Always be 100% honest about medical conditions and medication when buying travel insurance. Generally, do not give the insurer any reason to reject your claim. They will not pay out if you mislead them on your application.