A coalition of organizations, led by the consumer advocacy group Which?, recently filed a super-complaint against the insurance industry’s bad behavior. They’re shining a light on predatory practices around claims handling and customer service. This initiative comes in the wake of troubling reports regarding insurers’ responsiveness and their treatment of clients following distressing events.
In the first half of 2022, insurers in the UK paid out more than £1.7 billion. This total accounted for over 300,000 home insurance-related claims. Yet, even with this gargantuan payout, the acceptance rates for all claim types show a troubling racial gap. This approval rate—unusual in its area and from prior days—car insurance claims moved. By comparison, just 63% of buildings insurance claims and 80% of travel insurance claims were found in the consumers’ favour. This inconsistency leads one to question the practices used by insurers in handling claims.
Our super-complaint specifically highlights the systemic nature of these concerns, using illustrative examples of cases that highlight these problems. When Yvette Greenley’s flight from Luton to Egypt was turned back mid-air due to technical problems, it created huge hurdles. Her insurer first refused to pay her £140 in accommodation and airport transfer costs. This occurred despite the airline having already refunded all her ticket expenses.
“I was flummoxed, then fuming about it. They seemed to dismiss the fact that the plane turned around.” – Yvette Greenley
Likewise, the third person faced challenges after his house was devastated by damage from Storm Darragh. First, his insurer tried to deny him the money to repair his home. They argued that the windspeed was 2 miles per hour below their own definition of a storm. These types of decisions have been criticized for allowing insurers to narrowly define events and avoid fulfilling their contractual obligations to policyholders.
James Daley, managing director of Fairer Finance and one of several industry experts to have expressed support for the super-complaint. He expressed concern over the regulatory environment surrounding insurers, stating, “The FCA has only recently finished a number of studies looking at this market – and while it acknowledged a number of failures, it seems to have no appetite to tackle these.”
Charities have expressed concern over the impact of travel insurance on vulnerable populations. According to recent press reports, cancer patients are being price gouged out of coverage plans or shipped long distances away, limiting their option to navigate safely on the road. This issue intersects with larger issues of how insurance products are sufficient and equitable.
Rocio Concha, a representative from Which?, emphasized the emotional toll these experiences can have on individuals seeking support from their insurers.
“We have heard heartbreaking stories from people who have found the experience of dealing with an insurance company worse than the distressing life events that led to their claim.” – Rocio Concha
The Association of British Insurers (ABI) has responded to the super-complaint, claiming no body is more committed than the ABI to improving customers experiences. A spokesperson stated, “We’re working closely with the regulator to ensure good outcomes for customers and will engage with Which? to understand the details of its concerns.”
In an environment where consumers are clamoring for transparency and fairness, the insurance claims industry is coming under an intense spotlight. The super-complaint addresses these individual complaints directly. It also exposes the systemic issues within the industry that often mislead policyholders on what they are owed and what their rights are.
Which? has highlighted that sales practices within the insurance sector can lead to significant misunderstandings about coverage, leaving consumers vulnerable at critical moments. The organization’s Work Your Policy campaign is part of a national reform movement to change how insurers do business and serve their customers and communities.
