Insurance not so ‘simples’ warns Consumer Panel
19 July 2013
The Financial Services Consumer Panel has today 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 (1). 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 (2). 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.”
Notes to editors
- Financial Ombudsman Service Annual Report to the year ending 2013 Excluding PPI, there were 33,172 general insurance complaints in 2013 compared to 19,102 in 2009, an increase of 14,070 complaints.
- ABI analysis of ONS statistics can be found here
- Biographical details for Sue Lewis and photographs in a range of resolutions are available on our website
- You can read the full text of our report on our website
- The decision to appoint the Chair of the Panel was made by the FCA Board and approved by HM Treasury effective from the 1 July 2013.
- The Consumer Panel is a statutory body under the Financial Services Act 2012. It was initially established by the Financial Services Authority in December 1998. The Panel advises the FCA on the interests and concerns of consumers and reports on the FCA's performance in meeting its objectives.
- The Panel’s membership is drawn from a broad range of backgrounds with expertise including market research, law, financial services industry, financial inclusion, European Regulation, financial regulation, consumer advice, campaigning, communications, compliance and later-life issues.
- The emphasis of the Panel's work is on activities that are regulated by the FCA, although it may also look at the impact on consumers of activities outside but related to the FCA's remit. More information about the Panel's work is available here.