FCA seeks improved claims handling as BI payouts rise
A Financial Conduct Authority (FCA) review of business interruption claim handling has called for improvements as payouts resulting from the UK legal test case reach £1.5 billion ($2.6 billion).
The FCA has welcomed insurers quickly paying interim amounts, reallocating resources and proactively communicating with policyholders, but the review also identified shortcomings.
Concerns include the handling of claims from vulnerable customers, record keeping of policy wordings and identifying where customers have experienced unnecessary delays.
“We have been working alongside insurers to ensure that claims are settled quickly, but we are not complacent, and today’s report is clear that, while we have observed good practice, there are lessons to be learned for the handling of all claims,” Executive Director of Consumer and Competition Sheldon Mills said last week.
“As consumers and businesses across the country are affected by inflationary pressures and the rising cost of living, it is crucial that insurers are handling claims promptly and treating customers fairly.”
The review finds some insurer quality assurance reviews are too focused on the financial outcome of the claim rather than the full customer experience, failing to identify where there have been unreasonable delays.
Customer communications are not always tailored to the recipient and some firms don’t adequately identify vulnerable customers, or there’s an inconsistent approach in dealing with their needs.
The FCA has separately been monitoring payment progress since the Supreme Court on January 15 last year issued its judgment on the business interruption test case. Data collection moved to a six-monthly basis earlier this year.
Data published last week shows that final settlements totalling £1.21 billion ($2.1 billion) have been made for 34,506 claims, while interim payments of £296.9 million ($515.1 million) have been made for 1560 claims.
The number of claims where the insurer’s decision is still pending on whether there’s a valid claim has fallen to 665 from 2179 in March.
FCA says it expects to collect final data on the payments next March.
