Insurance firms are handling claims slowly – as well as forcing customers to chase them, an investigation from consumer champion Which? has revealed.
Almost half (48%) of all people making a claim about home, travel, motor and pet insurance experienced at least one problem in their claim journey.
These problems included having to repeatedly chase insurers for information on their case and insurers not identifying and responding appropriately when people were struggling as a result of the incident that led to their claim. Where insurers brought in third parties to deal with claims, these problems were even worse.
Some customers felt harassed for difficult to obtain information about seriously ill or deceased family members before being told the records were not necessary after all, while one woman developed asthma when she was forced to live in a mould-ridden home while her claim dragged on for months.
Rocio Concha, Which? director of policy and advocacy, said: “This research paints a shocking picture of insurers’ failure to handle customers’ claims in a timely, empathetic way – and it’s particularly concerning to see how people in vulnerable circumstances due to the event that led to their claim are being failed by their insurers.
“At a time when many consumers face soaring premiums, it’s clear they’re being ripped off – either by abysmal claims handling that doesn’t match up to the price they’re paying, or by unjustifiably high premiums, especially for those who can’t afford to pay for a year’s cover in one go.
“Today, we say enough is enough. The rules for insurers are clear, but the insurance rip-off will not end unless the regulator takes meaningful action against firms that consistently fall short.”
In one particularly shocking case, an insurer asked a customer, Tara, who had recently been made a widow, where her husband was when she called about their joint policy, despite the firm knowing of his death.
Tara’s home had been burgled shortly after her husband’s death and items with sentimental value were stolen. Instead of her insurer showing compassion in a traumatic situation, it showed little empathy, failing to record her bereavement and asking inappropriate questions.
How well insurers dealt with the claim had a knock-on effect on customers’ ability to do other things, with over a quarter (28%) of respondents saying insurers’ poor handling of claims affected this.
The research also found that insurers’ behaviour had a direct impact on customers’ physical and mental health. Nearly a third (31%) said insurers’ actions negatively impacted their stress levels, while one in 10 had sleep issues and another one in 10 said the claims process affected their physical health.
This was the case for one interviewee the consumer champion spoke to, Diane, from Radlett in Hertfordshire. She was badly let down by her insurance companies Hiscox and Ark Insurance after a room in her home was made uninhabitable due to water damage from a leak. Diane was covered for contents and buildings with two different insurers when she started to claim to fix the leak and replace her damaged belongings.
However, the process quickly became protracted and repetitive as she was asked to deal with a separate third party claims handler – and the representative it promised to send to assess her home was not dispatched to the home.
The third party claims handler’s delays in the process caused Diane and her family stress, but also meant that the mould spores in her home were getting worse and triggered a respiratory infection and asthma. The third-party assessor eventually dispatched to the house was shocked at the conditions Diane’s family were living in and took immediate remedial action to prevent further harm.
Insurers that use third party companies are required by the regulator to consider how this can impact their customers and the regulator identifies this as a key risk that can cause consumer harm.
Regulator, the Financial Conduct Authority, plans to review how the insurance sector handles claims as well as how all financial services firms treat customers in vulnerable circumstances.
Which? urged the FCA to take tough action against insurers that consistently fail to meet the required standards.
It’s not just general insurance providers who have been found wanting.
PropertyWire approached Kevin Carr, an expert in the income protection space, who noted that insurers in his sector have also been guilty of service-based issues, mainly due to not having enough staff.