July 3, 2023
In December 2022, the FCA issued a questionnaire to a selection of the largest general insurance firms to assess whether they were meeting the expectations it set out in a Dear CEO letter issued in September 2022. The questionnaire was issued to eleven firms covering 35% of the motor and 53% of the buildings & contents insurance markets. The FCA has now reviewed how home and motor insurers are supporting customers in financial difficulty and handling claims, and has published examples of good practice and areas where firms need to improve.
The FCA assessed firms against the three key expectations outlined in the Dear CEO letter to understand how they were providing appropriate support to customers in financial difficulty, were ensuring consumers get access to fair value products, and were ensuring claims are handled promptly and fairly. In outlining some stability in its findings, the FCA clarified that cancellations due to non-payment of premiums were low and stable, and that the proportion of policies paid by monthly instalments and the average total excess levels were also broadly static.
The review results set out findings in relation to:
- governance and controls;
- key trends;
- good practices;
- poor practices; and
- what firms need to do.
Other key areas of findings were:
- examples of lengthy claims handling times;
- volumes of claim complaints increasing;
- rejected claims also increasing;
- customers abandoning claims; and
- much more to be done on the identification of vulnerable customers
In outlining what firms need to do, it clarifies that these findings are also relevant for the implementation of the Consumer Duty and the ability to demonstrate firms are meeting the required outcomes (products & services; price & value; consumer understanding; and consumer support).
Alongside the publication of these results, the FCA has published a press release, and a web page introducing a new Policy Statement PS23/9 which includes Finalised Guidance (including a new section in ICOBS – ICOBS 2.7) on supporting insurance customers in financial difficulty.