FCA figures reveal home insurance still falling short on payouts
We've called for the Financial Conduct Authority (FCA) to grapple with widespread insurance failings. But as the deadline approaches for it to respond, new data shows home insurance claims acceptance rates remain stubbornly low.
Figures published last month by the FCA show that in 2024, insurers paid out 70.7% of claims made on combined buildings and contents insurance policies – similar to the rate of 71.9% in 2023.
Contents-only customers' claims were accepted 73.5% of the time (76.5% the prior year). Just 63.2% of claims on buildings-only policies were paid – virtually identical to 63.0% paid in 2023.
In the majority of other insurance areas in the FCA's data, more than 90% of claims were paid.
Claims acceptance by insurance type
And with some home insurance firms, the picture appears even worse. Esure, Lloyds Bank and Rentokil are listed as having paid just 45-50% of claims on buildings-only policies, with EUI (Admiral's parent company), Integra Solutions and Intact Insurance (formerly RSA), accepting 50-55% of claims.
Meanwhile, AA, Esure, Lemonade and Lloyds Bank accepted just 55-60% of claims on combined buildings and contents policies.
How home insurers explain their figures
When we contacted the firms we named as having low claims acceptance rates for comment, none of them told us the rates quoted were factually wrong. Integra blamed 'clear policy exclusions' for certain claims being declined, while Rentokil flagged that it provided 'specialised property insurance' products covering woodworm, wood rot and rising damp problems.
However, several firms did challenge how fairly their figures were represented in the data compared to those of other insurers.
Admiral and Lloyds said their claims acceptance figures include customer 'enquiries' – for example, a customer contacting the insurer to ask about their cover, to help decide whether to try claiming or not. Admiral and Lloyds say they include queries in their figures, but Lloyds alleges that 'other firms exclude these'. An insurer that doesn't log 'queries' of this type in its figures could appear to be accepting more claims than one which includes them.
The AA similarly claimed that 'insurers define claims acceptance differently', and added that insurers 'have different mixes of business, and this makes it difficult to get true like-for-like comparisons'.
Lemonade, meanwhile, told us it had launched its buildings and contents cover mid-way through 2024, and so its reported figures were a 'snapshot' based on a very small number of claims that was 'not representative of mature performance'. It added: 'We are proud of the progress we're seeing as the book matures and will keep raising the bar for our customers.'
The FCA's position
In its guidelines to insurance firms, the FCA requires insurers to include queries that could potentially become claims in the figures they supply for its statistics.
However, this year it's noted that comparisons between individual firms may not always be like-for-like, with some having different kinds of product and target market – and that there's the 'possibility' of some inconsistencies in how some firms have reported their claims rates.
Which? super-complaint
On 23rd September, Which? used its legal powers to submit a super-complaint to the FCA over our concerns about the home and travel insurance markets.
Poor claims acceptance rates in both of these markets was one reason for raising concerns with the regulator, along with poor treatment of customers during the claims process, and the FCA taking insufficient steps to address these and other issues affecting consumers.
The FCA has until 23 December to respond to the super-complaint.
- Find out more: Learn more about our super-complaint.
'It's time for the regulator to get tough'
Rocio Concha, Which? director of policy and advocacy, said: 'The home insurance market is currently failing to meet customer needs and requires urgent regulatory action.
'With claims acceptance rates still stubbornly low, many customers are enduring ordeals with their insurer that can become far more stressful than the original event they're claiming for.
'It's time for the regulator to get tough with firms failing consumers, sending a clear message that poor performance won't be tolerated any longer.'
- Find out more:Sign our petition.
Do I have to accept my claim being rejected?
Not necessarily. Your insurer can't just choose to reject your claim – it must be able to explain its decision based on your cover, the policy wording, and the specifics of the situation. If you think something doesn't add up in its decision, it's worth challenging the insurer and making sure it's aware of all the relevant facts.
1. Don't be afraid to ask questions. If you've tried to start a claim but your insurer has told you 'no' or not to bother, make sure it's given you a clear explanation as to why before you move on. Unfortunately, in many cases, insurers aren't initially forthcoming about precisely why they won't pay out.
2. Make a complaint. If you disagree with your insurer, make a formal complaint. In writing is best, and label clearly (for example, in the subject heading) that you're making a complaint. Explain your point of view and where you dispute or don't understand the insurer's reasoning, and what you would like it to take into account in reassessing your claim.
3. Complain to the Financial Ombudsman Service (FOS). If your insurer hasn't resolved your complaint to your satisfaction within eight weeks, you have the option to escalate the matter to the FOS. The FOS will independently review if the insurer has treated you fairly and reasonably. If the FOS finds it hasn't, the insurer must comply with the FOS's instructions to address the problem. It's a free-to-use service, but it can take several months to process complaints.