How can you support customers with the cost of living when handling claims?

Issues around claims handling

Linked to this new guidance, the FCA published some issues around claims handling when it looked at how home and motor insurance customers are being supported. The issues covered:

• Identification and recording of potentially vulnerable customers across firms:
  • data gaps on the number of vulnerable customers receiving support.
  • how each firm in the distribution chain considered their own approach.
• Time taken to assess and resolve claims and the impact on renewal premiums.
• Increasing volumes of complaints relating to claims handling:
  • The FCA called out that claim settlements were one of the most common causes for complaints to motor insurance firms.
  • In particular, the FCA referenced settlements being lower than the vehicle’s fair market value after a write-off, and this only being increased after a complaint: “Offering a price lower than fair market value is not allowed under FCA rules”.
  • The FCA reminded firms of its previous warning against undervaluing cars and other insured items.
• Increasing number of rejected claims.

The FCA will monitor trends in customers abandoning claims and fraudulent/exaggerated claims.

What to do

The FCA is already taking action against firms that may have broken its rules.

The regulator says that firms should focus on:

• Governance and controls in relation to: (1) supporting customers in financial difficulty; (2) fair value; and (3) handling claims promptly and fairly.
• MI and data, making sure there are good flows of information between manufacturers and distributors.
• Using these findings in your implementation of the Consumer Duty and considering your ability to demonstrate you are meeting the four outcomes.

If you are worried about the implications on your firm and potential regulatory action, then you may wish to seek external support.

References

[1] Handbook Notice No 111 – June 2023 | FCA