– FCA thematic reviews of insurance claims John Parker – Technical Specialist, General Insurance & Protection – IFAA conference – 12 November 2015 – 1
Agenda FCA overview • Sector Overview • What is a thematic review • Household and travel claims • First party SME claims • Where is UK GI industry now • 2
The Financial Conduct Authority (FCA) 3
Sector Overview 4
Thematic reviews Enables the FCA to look at practices across a number of • firms In-depth study of an issue with a report being published on • findings and actions required Customer research can provide empirical evidence of the • customers’ experiences General insurance thematic projects include; • - Mobile phones – - Price comparison websites – 5 - Premium finance –
Claims reviews Moment of truth • Does the industry deliver against what the policyholder • thought they had purchased Raises questions about sales and purchase of products • Not looked in detail at sales in the claims reviews • SMEs asked about what is important in purchasing; • - Right cover more important than price – - Get right cover at lowest price – 6 - Did not scrutinise detailed terms and conditions –
Household and travel claims Review to assess whether consumers as claimants at the • heart of insurers’ businesses Quantitative consumer research showed reasonably high • satisfaction levels: - 82% for successful claimants – - 64% across successful, rejected and withdrawn – More innovation and customer focus in household than travel • because more profitable line of business In household some insurers demonstrated desire to own • claims outcomes for policyholders 7 - Articulate vision of one in-bound call from claimant with – all subsequent communication outbound
Household and travel claims Variation in degree to which insurers actively challenging • themselves to improve Drive to obtaining consumer feedback and using it to • enhance products and service Areas for improvement: • - Frequent problems in delivery through supply chain – - Treatment of consumers with pre-existing medical conditions in travel – - Clearer explanation of why claims rejected – - High dissatisfaction with complaints handling, even among successful – complainants (52%) 8
SME claims More complicated claims landscape than in travel and • household Wanted to look at role insurers, MGAs, brokers and loss • assessors played; and behind them loss adjusters and TPAs. Focus on claims >£5k as more critical to the SME and not • desktop handled. Loss adjuster generally involved Qualitative customer research to understand: • - Customer experience, 100 SMEs were interviewed – - 20 in-depth case studies – 9 FCA thematic team interviewed management, visited claims • operations and reviewed 100 claims files
SME claims - key findings Gap between SME expectations and what was delivered • Considerable variation in how well claims were handled; • - Number of claims handled well – - Evidence of difficult, traumatic, and unduly prolonged experience for – SME struggling to recover its business Little or no admission of liability being unfairly delayed • Where non-disclosure the materiality of this carefully • assessed and proportionate stance taken High incidence (20%) of some form of under-insurance; • instances of > 50% under-insurance 10
Delivering what is important to consumers Consistent view across the two claims reviews • FNOL process that is easy and provides reassurance; understanding of • claimant’s circumstances and advise given early Where required presence of adjuster on-site with appropriate speed • Co-ordination of parties/suppliers involved • Clearly setting out next steps and who will do what – and delivering against • this Ownership to drive the claim forward and proactive communication • Fair and prompt settlement with clear explanation of basis of settlement • 11
Part loss adjusters play Adjuster is the on-site face of the insurer • Expertise and behaviour critically influence the policyholders’ • claims experience SME review businesses reported very variable experiences; • - Adjuster was helpful and fair; and – - Adjuster was hostile and seeking every opportunity to reduce the claim – cost Examples of adjusters out of their depth, for example did not • understand cover Positive experience when claims handled by major loss • 12 teams
Current Position – Claims handling Position more positive in household than SME • claims journey; - Demands of high street retail brands on insurers – - Less complex landscape than SME – - Claims less complicated, for example, no BI – SME claims journey has a number of areas of • improvements Considerable way to go to: • - Achieve true focus on customers as claimants – 13 - Deliver what is important to them –
Current Position - Policy coverage Need to significantly reduce the incidence of under-insurance • BIBA due to publish guidance for its members on avoiding • under-insurance BIBA and FCA working with Federation of Small Businesses • to increase SMEs understanding of insurance FCA will reflect on what else needs to be done • 14
– Q&As 15
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