Some insurance customers ‘left in the dark over why a claim has been rejected’

Not getting an explanation for why a claim has not being fully accepted puts consumers at a ‘serious disadvantage’, the consumer group said.

The concerns were raised as the Financial Conduct Authority is poised to introduce a new consumer duty (PA) (PA Archive)

Concerns that some insurance customers are being left in the dark over why their claim has not been fully accepted have been raised by Which?

The consumer group commissioned a survey of thousands of car and home insurance customers in November 2022 who had made a claim in the previous two years. More than 800 travel insurance customers were also surveyed in March 2023, who had claimed in the past two years.

While the majority had their claims fully paid, the research indicated that some were paid only in part, or were rejected, or were in dispute.

One in seven (14%) of car insurance claimants reported that their claim was either partially accepted, rejected or in dispute. This was also the case for more than a fifth (22%) of home insurance claimants and nearly two-fifths (38%) of travel insurance claimants surveyed.

Over half (56%) of home insurance claimants and more than four in 10 (43%) travel insurance claimants whose claim was not fully accepted claimed they did not receive an explanation as to why.

Claimants who don’t get the full picture from their insurers will struggle to take their claim to the ombudsman, as they don’t have much information to prove where they and their insurer disagree

Sam Richardson, Which? Money

Which? said that not receiving an explanation for a rejected claim may make it harder to challenge the decision because of the limited information the customer has been told.

The concerns were raised as the regulator, the Financial Conduct Authority (FCA), is poised to introduce a new consumer duty, setting higher and clearer standards of consumer protections, from July 31.

One of the outcomes financial firms will need to deliver under the consumer duty is in relation to “consumer understanding”, with communications needing to be easy to understand for the customer, Which? pointed out.

The consumer group said it is concerned that apparent vagueness from some firms could make the process harder for people who are not confident enough to pursue clarification around claims decisions.

Sam Richardson, deputy editor of Which? Money, said: “No one wants to be in the position where they have to claim on their insurance – still less have that claim be turned down. But not getting an explanation for why a claim hasn’t been accepted in full isn’t just frustrating – it puts you, the consumer, at a serious disadvantage.

“Claimants who don’t get the full picture from their insurers will struggle to take their claim to the ombudsman, as they don’t have much information to prove where they and their insurer disagree.”

We can appreciate that it is frustrating when a claim is declined and knowing why is crucial. Our members are always looking at ways to improve communication with customers

ABI spokesperson

More than 2,200 car insurance customers and over 1,500 home insurance customers who had made a claim within the last two years were surveyed.

Which? commissioned data company Dynata to carry out research on its behalf.

An Association of British Insurers (ABI) spokesperson said: “Insurance is there to protect you when things go wrong and our data shows that the vast majority of claims are accepted.

“However, we can appreciate that it is frustrating when a claim is declined and knowing why is crucial. Our members are always looking at ways to improve communication with customers and know that sharing information in a clear, accessible and timely way is vital.

“If you’re unhappy with how your claim has been handled and wish to make a complaint, you should follow your insurer’s complaints process in the first instance.

“If you’re unsatisfied with the process, you can then contact the Financial Ombudsman Service (FOS). Insurers will always aim to deal with complaints as swiftly as possible and will work with the FOS to understand where any learnings can be made.”