The Financial Conduct Authority (FCA) has called for life insurers to settle claims quicker and improve how they measure customer experience.
The regulator carried out a multi-firm review based on data requested from 15 life insurers, representing more than 75% of the life protection market. The FCA asked firms to set out their ‘customer journeys’ for life products within four categories: term insurance, group life cover, guaranteed over-50 plans and whole-of-life insurance.
The regulator found evidence of good practice, such as firms providing additional support for claimants throughout what is a difficult time for them. It also noted that firms can face challenges in providing a timely service, such as obtaining the evidence needed to assess a claim.
However, the FCA also found that many firms still have further to go to meet its expectations, particularly in the measurement, monitoring, and delivery of good service outcomes for customers.
The FCA found that firms took, on average, between 53 and 122 days to process a claim, from start to finish, for a term insurance policy.
For group life cover, claims were settled within 36 days on average. They took an average of 20 days for over-50 plans, and 53 days for whole of life. However, measurement is inconsistent as few firms captured these figures.
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The FCA will be engaging with industry to collectively improve customer outcomes and address the findings. The regulator will do further work to understand what changes have been made and will take action if it doesn’t see improvements.
Matt Brewis, director of insurance at the FCA, said: “The loss of a loved one can be intensely stressful and we expect firms to offer the right support to help their customers during this difficult time. We expect all life insurers to act on our findings and avoid unnecessary delays with claims.”
Following the introduction of the Consumer Duty in July 2023, firms are required to ensure consumers are at the heart of their business and must act to deliver good outcomes for them.
In September 2023, the FCA issued a life insurance letter raising a series of concerns about poor customer services being delivered to customers. It highlighted slow transfer and claims settlement times in particular.
This article was first published on Mortgage Solutions‘ sister site, YourMoney.com. Read: Calls for life insurance firms to improve bereavement handling
