A Financial Conduct Authority review of insurance claims handling for small and medium-sized enterprises has found the service offered by insurers, brokers and loss assessors is often not working in customers interests.
Whilst SMEs’ insurance needs can be relatively complex, a thematic review found that they are also less likely to be sophisticated customers and many have similar knowledge and experience to retail consumers when buying general insurance products.
The regulator assessed 25 firms’ involved in the settlement and management of claims, including five insurers, 10 insurance intermediaries and 10 loss assessing firms. It also looked at the claims experiences of 100 SMEs, focusing on larger claims of over £5,000.
Linda Woodall, acting director of supervision at the FCA, said: “In an area where any delay could have a serious impact on a business or someone’s livelihood, it is vital that claims are taken seriously and processed promptly; that means putting customers at the very heart of the process.
“We expect all firms to carefully analyse the findings of the review and make any necessary changes to their approach to ensure that SME claimants are treated fairly.”
The FCA uncovered numerous examples of poor practice in the handling of claims, including: delays in the initial visit by loss adjusters; claimants feeling unclear about what actions they should take to minimise disruption to their business; dissatisfaction among SMEs about a lack of clarity over who was responsible for driving claims outcomes; and a lack of clarity over the next steps in the claims process.
In addition, in a significant number of cases, the sums insured were inadequate to cover the loss incurred, highlighting the importance for businesses to accurately assess exactly how much cover they need in the event of a major disruption.
The regulator stated that it will engage with firms, senior figures in the industry and relevant trade bodies to discuss the findings of the review, its expectations, and the changes that may be required to improve outcomes for SME customers.
It will also provide feedback to the firms included in the review, and where appropriate, firms may be asked to carry out internal reviews to determine whether individual instances of poor claims handling reflects widespread issues within the firm.
peter.walker@ft.com
