Life Insurance  

Major insurers snubbed by claims charter after falling short on 'best practice'

Major insurers snubbed by claims charter after falling short on 'best practice'
Jerzy Górecki, Pixabay

Aviva, Royal London and Canada Life have all failed to meet ‘best practice’ criteria for how they pay customers for life insurance claims.

The ‘Claims Charter’ set up by the Protection Distribution Group, a group representing advice firms, saw 14 insurers join this year following its latest review of claims handling practices across the industry.

Now 21 insurers have signed the charter, which was created back in 2018 to encourage better outcomes for consumers, and will be reviewed annually going forward. But three big insurance firms still haven’t signed it.

The charter does not reflect actual payout rates, meaning the three firms could be paying out more than others which are signatories.

“There are a number of insurers who meet many, but not quite all, of the criteria and these include Aviva, Canada Life and Royal London,” a spokesperson told FTAdviser.

“The charter is not about whether claims are being paid, and we applaud all insurers with high pay-out rates, it’s specifically about improving how claims are paid and the claims experience for claimants.”

The group said it was keen to add to the current list of signatories and is working with a number of insurers to make this happen.

Canada Life said it was open to joining the Claims Charter in the future, but that it was not where the business was focused at the time of the latest review. 

“As our individual protection business continues to grow it’s something we’ll look at again,” the firm said.

Canada Life has traditionally concentrated its efforts on group protection, but the insurer is - under its new chief executive Lindsey Rix - keen to steer the business towards a “lifetime wealth proposition” which offers more joined up products.

A Royal London spokesperson said it had been a signatory of the Claims Charter in the past, but that this year an “issue” was identified leading to it being bunked off the list.

“The Protection Distribution Group carried out a review of how providers that signed up to the charter are performing against it and identified an issue which means that we are currently not a signatory of the charter,” the insurer told FTAdviser.

“We care about the claims experience of our customers and have already been in discussions with the PDG about the steps we have been taking and we are working hard towards once again becoming a signatory of the Claims Charter in the very near future.”

Aviva has also been approached for comment.

FTAdviser understands the biggest area of Financial Ombudsman Service complaints in life insurance is on administration or customer service issues.

This is followed by issues where a consumer feels they have been mis-sold a product, either through the suitability of advice or the consumer feeling that they haven’t had the product fully explained to them.