Which? Launches Super-Complaint Against "Broken" Home and Travel Insurance Markets
Which?, the UK's consumer champion, has filed a super-complaint with the Financial Conduct Authority (FCA) regarding concerns about the home and travel insurance sectors. This action stems from widespread issues including poor claims handling, inappropriate sales practices, and a perceived lack of regulatory oversight, leading to significant consumer harm.
Key Areas of Concern
The super-complaint highlights three main areas where consumers are allegedly being let down by the insurance industry:
- Poor Claims Handling: Insurers are often outsourcing claims to specialists, leading to delays and complications.
- Inappropriate Sales Processes: Consumers are often confused about policy coverage due to inadequate sales practices, resulting in unexpected claim denials.
- Lack of FCA Enforcement: The FCA is accused of not providing adequate protection for consumers in these markets.
Evidence and Impact on Consumers
Which?'s complaint is based on extensive research, including surveys of thousands of insurance customers, in-depth interviews, analysis of Financial Ombudsman Service (FOS) decisions, and independent legal analysis. The consumer group has reported that many customers have had devastating experiences with insurance companies. Some have found the claims process more stressful than the incident that led to the claim itself.
Examples include Yvette Greenley, whose holiday was disrupted by a flight cancellation. Her insurer initially refused her claim, despite the airline refunding the flight costs. Another example is Kaja and Dean Cordwell, whose home was severely damaged in a fire. They are currently embroiled in a dispute with their insurer, LV General Insurance (LVGI), over delays in renovations and insufficient compensation.
FCA's Response and Industry Perspective
The FCA has acknowledged issues in the home and travel insurance markets, stating it has been "focused on raising standards" and will respond to the super-complaint in due course. The regulator has also stated that it uncovered problems during recent reviews of insurers' claims handling, specifically regarding outsourcing and storm definitions. They have stated they will be holding them and their senior managers accountable for the changes needed.
The Association of British Insurers (ABI), representing providers, stated that its members work hard to ensure customers understand their policies and handle claims efficiently. They cited that insurers have paid out substantial sums for home and travel insurance claims in recent periods and have stated that they are working closely with the regulator.
Call to Action and Potential Outcomes
Which? is urging the FCA to take immediate action to address the identified failings. The consumer group is calling for the FCA to intervene by taking enforcement action against non-compliant firms, launch a market study to understand the underlying causes of poor consumer outcomes, and work with the government to review consumer protections in insurance. Rocio Concha, Which? Director of Policy and Advocacy, emphasized the need for fundamental changes in how insurance companies treat their customers. The FCA has 90 days to respond to the super-complaint.
Martin Lewis's Perspective
Martin Lewis, Chair of MoneySavingExpert.com and the Money & Mental Health Policy Institute, has highlighted an "imbalance of power between firms and consumers" in the insurance market. He supported the super-complaint and hopes it will lead to a thorough investigation of the problems facing consumers and the implementation of appropriate regulatory measures.
What You Can Do If Treated Unfairly by Your Insurer
If you believe your insurer has treated you unfairly, here are some steps you can take:
- Be familiar with your policy wording.
- Declare any vulnerabilities to your insurer.
- File a formal complaint with your insurer in writing.
- If unresolved, escalate the matter to the Financial Ombudsman Service (FOS).
