ILC ARTICLE

Claims complaints on the rise, now responsible for 73% of all FOS cases 

30th August 2023

Travel insurance is the worst performing business line with 87% of all travel-related complaints related to claims.

The number of complaints relating to claims is on the rise, with the Financial Ombudsman Service (FOS) receiving more than 8,000 claims-related complaints over the first quarter of 2023. 

This represents some 73% of all general insurance complaints, with this number on the rise as the industry struggles to get to grips with claims complaints in the run up to the Consumer Duty implementation deadline. 

Indeed, the total number of claims complaints rose by some 60% over Q1 2023, up from a little over 5,000 for the last three months of 2022 when claims accounted for 68% of all complaints. 

Car and motorcycle insurance was the business line with the most claims complaints during Q1 2023, with more than 2,600 referred to the FOS – equal to 63% of the total number of motor complaints. 

Meanwhile, admin-related complaints accounted for a little over a third of all car and motorcycle insurance complaints, while sales and advice accounted for 4%. 

Travel Insurance Poorest Performing Line 

Of all the business lines to receive more than 500 complaints over the first three months of 2023, travel insurance not only received the third highest number of total complaints – with more than 1,200 cases referred to the ombudsman – but it also received the highest proportion of claims-related complaints. 

Indeed, some 87% of all travel insurance-related complaints referred to the FOS were about the claims process. 

Buildings insurance was another line that is struggling to manage claims complaints after it received the second highest number of complaints over the first three months of 2023. 

The business line had more than 1,400 claims complaints referred to the FOS over that period, which equates to some 81% of total complaints. 

Industry Must do More 

And the high proportion of claims-related complaints being faced by the industry should be of concern to insurers, particularly with the intensifying regulatory spotlight on the sector in the run up to the Consumer Duty implementation deadline. 

To combat this, insurers and brokers need to do more at the point of quote to ensure consumers have a better understanding of what is and isn’t covered by a policy. 

It is by closing this expectation gap that insurers can begin to reduce the number of complaints being raised about the claims processed, as well as the number that are being upheld in favour of the customer. 

In turn, this will help to improve the customer experience and boost the overall value offered by a policy, which itself will lead to increased loyalty and greater customer retention.