10:59 am, March 28, 2024
The Financial Conduct Authority says it has found evidence to suggest that some insurers are offering customers less than their written-off or stolen vehicle is worth – and in some cases only raising the offer when a complaint is made.
It follows a review by the regulator and comes despite the FCA’s previous warnings that insurers mustn’t undervalue cars or other insured items when settling claims.
The survey was sent to 12 firms that together make up an estimated 70% of the market.
It included a data request to help it assess how settlement amounts compared with initial guide valuations – and some firms reported average settlement values that were lower than the available guide prices.
The review didn’t examine individual cases, but the FCA said it considered that the low average settlement figures indicated that some customers’ claims may have been handled unfairly.
Customers lacking the knowledge or experience of dealing with financial firms to question the initial settlement offer by insurers were therefore put at more risk of financial harm, said the FCA, because they were less likely to complain.
The authority said it was engaging with the firms included in its review to ensure they made improvements to address its findings.
It is also reminding insurers that any attempts to control claims costs by making offers lower than the customer is entitled to under their policy is a breach of its Insurance Conduct of Business Sourcebook.
Sheldon Mills, executive director of consumers and competition at the FCA, said: ‘Having your vehicle written off or stolen can be intensely stressful and we expect firms to offer the right support to help their customers.
‘We expect all motor insurers to take note of our findings and we are engaging directly with those that have issues that need to be addressed.’
Insurers are obliged to handle claims promptly and fairly under FCA rules, said the watchdog.
Following the introduction of the Consumer Duty last July, insurers must also make sure that customers are at the heart of their business and the firms must act to deliver good outcomes for them, added the FCA.
Customers who think their claim may have been undervalued can complain to their insurer and then to the Financial Ombudsman Service if the matter isn’t resolved.
In its multi-firm review, the FCA said insurers must handle claims promptly and fairly, in line with their obligations. As such, it expected firms’ processes for valuing vehicles to identify a fair estimate of their market worth.
