Insurance not so ‘simples’ warns Consumer Panel

The Financial Services Consumer Panel has published a short report setting out six challenges for the industry to improve the market for general insurance in the interests of consumers.

The Panel calls on the industry to:

be explicit where cover which a consumer might reasonably expect to be standard does not form part of a policy;

show clearly in cash the price increases to auto-renewed policies and remind consumers in good time that they can shop around for a better deal;

be clearer about the fees charged for basic policy changes and ensure charges reflect actual costs;

ensure information is presented in a way that encourages consumers to look beyond price when comparing policies, in line with Association of British Insurers best practice guidance;

be clearer about who owns comparison sites and whether or not they cover the whole of the market;

put customers first, reward loyalty and move away from a culture that treats consumers with suspicion.

Last financial year there were 33,172 general insurance complaints to the Financial Ombudsman Service compared to 19,102 in 2009. This increase of 14,070 complaints could be the tip of the iceberg, as not all dissatisfied customers escalate their complaint to the Ombudsman.
 
Sue Lewis, Consumer Panel Chair commented: "General insurance is vital to help people manage the risks of modern life. The average UK household spends £822 a year on general insurance products. That is a lot of money. Comparison websites make shopping around for a good insurance deal look easy, but people may find if they claim that their cover isn't what they expected, or they face a large excess. Our research has highlighted several areas where firms could do better. They must make it clear to customers up front exactly what they are paying for, and treat claims fairly.
 
The FCA has recognised the importance of firms' culture to good consumer outcomes, and we strongly support its focus on this area.  We hope our research will help inform the FCA's work and lead to better treatment for insurance customers."