FCA finds poor practice in home and travel insurance claims handling

The FCA has published analysis showing that increases in the cost of motor claims – including higher prices for cars, parts, labour, energy, and more complex supply chains – have contributed to premium increases, but there are a number of persisting issues with insurers’ claims handling processes.

While there was some evidence of good practice in the home and travel insurance sectors, evidence of poor claims handling included:

• Lack of oversight of outsourced services, resulting in poor customer outcomes, delays in settling claims and high complaint volumes;
• Insufficient MI resulting in failures to promptly identify and resolve claims handling issues and delays;
• High rejection rates for storm damage claims (only 32% of storm damage claims made to sample of firms in 2024 resulted in a payment); and
• Cash settlements being used without sufficient consideration of whether they are most suitable.

Where it has observed poor practice, the FCA is contacting firms – or taking action against them – as necessary.