FCA highlights good and poor practice in general insurance market for customers in financial difficulty

FCA has published examples of good and poor practice arising out of its review of how the general insurance market supports customers in financial difficulty and handles claims.

For customers whose policies had been cancelled due to non-payment of premiums, most firms ensured that appropriate alternative payment options were offered that would not allow debt to remain in place beyond renewal stage. Some examples of good practice included:

  • waiving fees and excesses;
  • adjusting payments;
  • offering payment holidays for up to 12 weeks;
  • actively inviting customers to speak to the firms if their circumstances had changed;
  • setting up a customer support hub; and
  • removing mid-term adjustment fees.

In terms of poor practice, one of the most common causes for complaints to motor insurance firms was claim settlement figures. There was evidence that some consumers who had their cars written off after an accident were being offered a price lower than the vehicle’s fair market value. FCA noted that this was in breach of its Rulebook, and referred to its December 2022 warning against insurance firms undervaluing insured items in claims.

Laura Wiles