how insurers increase your claims woes

Dear Rocio,

My insurance company is sparing me because of the dismal way they are handling my claim. What can be done to improve things?

Name and address provided

Rocio says: Auto and home insurance are described as “grudge purchases” because they are usually not optional. To be able to legally drive, you must be insured. Most mortgage providers require home insurance as a condition for a loan. So when customers feel ripped off With this policy, the consequences are not trivial.

Which one? Research has revealed several problems in both markets, from unfair pricing practices to poor claims handling.

Let’s start with pricing – an important consideration for consumers still struggling with the high cost of living. Figures from the trade association Association of British Insurers show that car insurance premiums have risen by an average of 25 percent between 2022 and 2023. Their latest premium tracker showed that prices in the second quarter of this year were a fifth more expensive than in the same period last year. years earlier.

The price of premiums is compounded by the additional costs faced by drivers and homeowners who pay monthly for coverage. Often these customers do this not by choice, but out of financial necessity – because they can’t afford to set aside the money to pay for everything at once each year.

Many companies continue to charge monthly interest rates on their repayments. We have found that some providers charge rates comparable to more expensive credit card providers, despite the lower risk to the insurer, as non-payments can lead to policy termination. The result is that these less financially resilient customers can end up paying hundreds of dollars more over the course of a year.

When it comes to the handling of claims, the picture is also worrying. Our in-depth analysis found that almost half of home, motorcycle, travel and pet insurance customers experienced at least one problem when submitting a claim. These problems ranged from repeatedly chasing insurers for information to not telling them why their claim was only partially accepted or rejected outright. When external companies became involved, the situation often became much more complex.

Which one? found that customers who were in a vulnerable position due to the event that led to their claim (e.g. a car accident or house fire) were twice as likely to report a problem.

It’s a worrying picture, but we are finally seeing signs of progress. A government-led taskforce has been set up to tackle the rising cost of car insurance, involving government departments, industry bodies and consumer groups such as Which? on its advisory panel to find out how the market can work more fairly for customers.

Further progress came last week when the Financial Conduct Authority launched a market inquiry into the issue of high interest rates for monthly paying consumers in both the car and home insurance markets. That’s the third major everyday insurance study it has recently launched – and which tells its own story about the scale of the insurance market’s problems.

All insurers are now bound by this the FCA’s consumer duty requirements, including ensuring customers get the support they need, when they need it, and ensuring they offer a fair price. But it is not clear whether they follow these requirements.

Which one? is concerned about how companies clearly present information about their policies and how initial quotes represent fair value when customers can negotiate with insurers after relatively short phone calls – sometimes for significant sums.

That’s positive the FCA is investigating some of the issues Which one? has focused on insurance – but it won’t be the first time the regulator has tried to tackle problems in this market – and meaningful action has not always been swift. For example, the FCA first raised concerns about GAP insurance products a decade ago, but only this year took meaningful action to address poor value.

Which one? will continue to hold insurers’ feet to the fire and urge the regulator to be vigilant until action is taken to end insurance fraud and make the market work more fairly for consumers.

Rocio Concha is which one? director of policy and advocacy. To post your question on this page,
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