Home insurance customers feeling neglected by insurers, Which? finds, as it names and shames firms most likely to be reprimanded for poor service
Some home and buildings insurance customers have spoken of feeling bullied or cheated by their insurers while making claims, leaving them facing a gruelling battle to receive money they are entitled to, a Which? investigation has found.
The consumer champion is concerned that policyholders are being left in the lurch by unnecessarily dragged out claims processes. Some also report facing adversarial treatment from claims staff when claims are being decided or settlements determined. This prolongs the ordeal for those trying to find a satisfactory resolution after often distressing events.
To get a better sense of how individual firms compared when it came to payout delays, declined claims and claim values, the consumer champion submitted a Freedom of Information request to the Financial Ombudsman Service (FOS), which acts as a free mediator between companies and consumers.
The data identified the 11 firms most likely to be found at fault in cases involving delays, declined claims and claims value disputes by the FOS. Customers can only go to the FOS after they have been unable to reach a resolution with their insurer.
Insurer Ageas was criticised by the FOS in seven in 10 (71%) of cases it ruled on about buildings insurance delays and six in 10 (61%) of cases about claim values, suggesting the majority of these customers face a struggle to get back what they are owed prior to involving the FOS.
Which? is also concerned about some insurers’ treatment of potentially vulnerable customers.
According to the Financial Conduct Authority (FCA), nearly half (47%) of the population shows at least one characteristic of vulnerability (poor health, low capability, recent negative life events and low financial resilience) and the regulator expects firms to have processes in place to support them with appropriate levels of care.
However, one home insurance customer Which? heard from, Marie Hooley, faced an ordeal to receive money she was entitled to after a house fire in March last year made her home uninhabitable. To compound matters, Marie’s husband died a couple of months after the fire. In January this year, Marie submitted invoices for repair work on her house to her insurer, Homeprotect, but, as of September, she was still waiting for the money - leaving her in limbo and £6,300 out of pocket.
Distressing cases such as these come at a time when insurers have been widely criticised for poor claims handling. Complaints to the FOS about buildings insurance between April and June were at their highest level in five years.
There has also been an increase in the number of upheld customer complaints against insurers, suggesting firms are wrongly denying customers the money they are owed - and therefore deepening their stress and worry. Forty per cent of claims made to the FOS were upheld in the customers’ favour in April-June this year, compared to 31 per cent in the same period last year.
Of the 34 products the FCA publishes General Insurance Values Measures data on, standalone buildings and contents cover are among the five products least likely to pay claims – with combined cover the sixth least likely.
For context, during 2022, virtually all (99%) of car insurance claims were accepted – but this figure was just 68 per cent for standalone buildings cover, and 76 per cent for claims on combined home insurance policies.
Which? spoke to nine claims experts. Most were loss assessors - professionals consumers can hire to act on their behalf in complex claims. However, some had worked as both loss adjusters (specialists contracted by insurers to evaluate claims) and loss assessors. One cited an example in which a claimant was offered £60,000 by their insurer to cover the whole claim, but after independent experts intervened the payout was pushed up to £250,000.
Some also suggested that one reason for home insurers failing to deal with claims in good time could be down to underinvestment in staff and training, leading to undertrained and inexperienced claims handlers and increased bureaucracy.
Another issue faced by some customers is the inherent imbalance of power between the firm and claimant when it comes to negotiating cash settlements. If the claim is complex, customers may struggle to check and challenge the insurer’s conclusions or simply be unable to afford the delay to getting the claim sorted, which could force some claimants into feeling as if they have no choice but to accept a lower payout.
However, those who do not give in could face lengthy waits for a satisfactory outcome. Earlier this year, Which? was contacted by one insurance customer, Robert Dawson, who owns a leasehold flat in a small block which was affected by subsidence. The property managing agent put in a claim for remedial work in 2016 and had to wait six years before the claim was dealt with, with Mr Dawson and his fellow leaseholders finding it nearly impossible to get updates on the claim’s progress.
The consumer champion believes that parts of the insurance market are simply not providing value for money for many consumers.
Which? believes that it is unacceptable for almost a third of buildings insurance claims to go declined. These figures also mask considerable harm for those who do get payouts, with many claimants that have suffered life-changing events and losses being offered considerably less than they should be and dragged through unnecessarily onerous processes.
Home insurers need to urgently make sure that the products and services they are selling meet reasonable expectations, so customers aren’t given a nasty surprise later on. And when handling claims, firms need to address issues exposed by the many shocking complaints that customers have made and have drawn rebuke from the independent Financial Ombudsman Service.
The FCA should investigate and make sure buildings insurance companies are complying with the Consumer Duty.
Rocio Concha, Which? Director of Policy and Advocacy, said:
“Our investigation paints a concerning picture of the home insurance market, which is clearly not providing value for money for many customers.
“When customers make claims, they should not be made to feel like a liability or face a needlessly adversarial process, which can prolong what is in many cases an already distressing experience.
“The FCA's Consumer Duty sets out very clear expectations on how firms should treat customers. The regulator needs to investigate and ensure that insurance companies are adhering to these rules and be ready to take action against those that don't.”
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Worst insurers for complaints table
Right of Replies
Of 10 insurers who spoke to Which? about their FOS statistics, all pointed out either that these figures represent very small proportions of customers who claim with them or that they have high general levels of customer satisfaction. Six (The AA, AXA, Fairmead, LV, UK Insurance and Zurich) also noted that volatile weather and ‘macroeconomic’ issues such as supply chain costs had created ‘exceptional strain’.
HDI also said that when the FOS upheld complaints, it hadn’t always disagreed with the insurer’s decision in declining the claim. Most (The AA, Accredited, Ageas, AXA, HDI, RSA and UK Insurance) explained they monitor FOS cases to improve their service - some saying they had recently restructured or invested in their claims teams. The AA said it had seen decreases in claims-related complaints upheld against it following an ‘improvement plan’.
A spokesperson for Ageas said:
“To put the FOS figures into context, the number of Ageas customers who complain is 1.26 per 1,000 policies in force. This is lower than most of our general insurance peers and means that our average complaints upheld rate is based on comparatively small volumes.
“Despite the fact that fewer of our customers complain, we recognise that we don’t get it right all the time and there is room for continuous improvement. We have therefore carried out detailed analysis of areas where we can improve and expect to see the impact of this work reflected in future results.”
A spokesperson for Homeprotect said:
“We are truly sorry for the delay Mrs Hooley experienced and the stress caused at what was already a difficult time for her. This was a particularly complex claim and whilst the majority of it was, in fact, paid in good time, we now know there has been an unacceptable delay in the processing of a final, smaller, payment. Once we were made aware of this we requested this payment be made straight away.
“As a company, we pride ourselves on offering our customers excellent service and we are disappointed this didn’t happen on this occasion.
“We are reviewing our procedures and processes to identify how and why this occurred and to ensure it doesn’t happen again.”
An Association of British Insurers spokesperson said:
“Insurers appreciate how stressful it can be for the customer when disaster strikes and want to process claims as quickly and efficiently as possible. Certain challenges beyond their control can impact on timings however, such as delays around repairs, access to skilled tradesmen and in some cases short supply of alternative accommodation. Clear and timely communication is vital to support the customer throughout any claim and we’re working with our members to understand where any improvements can be made.”
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