The claimant's friend

I'll be there for you, insurance watchdog tells dissatisfied policyhold ers

An insurance watchdog is offering to give insurers a "kick up the bum" to speed up the handling of claims and complaints.

The Insurance Ombudsman, who runs a free arbitration service for disputes over claims, is offering to send a letter to insurers for people unhappy with the progress of their claim.

The new service, which starts in January, follows research highlighting high levels of dissatisfaction among policyholders and the high levels of "drop out" among complainants.

Walter Merricks, the ombudsman, says: "It is remarkable how a piece of paper with Insurance Ombudsman on the letterhead works wonders."

According to the ombudsman's research, as many as 2 million people (10 per cent of all insurance customers) had some sort of problem with policies in the past year. But, of just over 1 million of those people who complained, 70 per cent were unhappy with the outcome or with their treatment. Mr Merricks, whose office is entirely funded by the insurance industry, says: "However you look at the figures, there is no cause for complacency."

It is also of concern that complainants appear to give up so easily. Only 70,000 people contacted the ombudsman for help last year, compared with 700,000 or more unhappy with the outcome of a complaint to an insurer.

The ombudsman believes so many consumers may be giving up because insurers' procedures for handling claims and complaints are too drawn out, or because they may not realise that, if challenged, companies will often reconsider decisions. A report by the consumer magazine Which? also accused financial companies of failing to publicise ombudsmen schemes.

The ombudsman's primary role is to act as a service for people who have reached deadlock with their insurer, although even after his rulings it is still possible for a policyholder to go to court to pursue a claim. Indeed, the vast majority of people who bring a case to his office are told that they must go back to their insurer for a final decision before the ombudsman can make a ruling. This procedure, however annoying for policyholders, continues. But the ombudsman will soon also contact the insurer directly with details of the complaint, assuming policyholders want them to.

The ombudsman is also telling insurers that they should reach a final decision within eight weeks - delays beyond this are likely to stand in policyholders' favour if their complaint reaches the ombudsman. He also wants to give policyholders an automatic right to bring their claims to his office if they have not been resolved within eight weeks.

Policyholders should bear in mind that even the threat of taking their complaint to the ombudsman may prompt an insurer to settle. While the ombudsman's service is free for policyholders, every time the ombudsman investigates and rules on a claim it in effect costs the company around pounds 500. In future companies may be charged a smaller fee for each initial enquiry and "get on the case" letter sent to an insurer.

q To contact the ombudsman ring 0845 600 6666.