Which? launches insurance 'super-complaint'

After more than a year of campaigning against poor practices in the insurance industry, Which? is today making a super-complaint to industry regulator, the Financial Conduct Authority (FCA).

The complaint concerns standards in the home and travel insurance markets, which are relied upon by tens of millions of customers - but which have some of the lowest claims acceptance rates. 

While the FCA has acknowledged ‘substandard’ service and widespread failings among insurers, it’s taken little decisive action to address the problems in these markets. 

Here, we break down the issues that Which? has uncovered, explain what a super-complaint is, and also what you can do now if your insurer is failing you. 

• Find out more: learn about our campaign to end the insurance ripoff

What Which? has found in these markets

For over a year, we’ve been investigating the insurance market.

We've conducted extensive original research into insurers’ claims-handling practices, examined policy terms and conditions, and analysed trends in complaints and customers’ expectations of the insurance policies they buy, producing four in-depth reports. 

We’ve also heard directly from policyholders who’ve received dismal service from their insurers when claiming.

The findings have pointed to systemic problems with how policies are sold and explained, and also with how claims are then handled - particularly among home and travel insurance customers.

• Find out more: consumer harm in claims-handling

The impact of insurance letting customers down

Having insurance claims rejected can leave customers in significant financial hardship or facing extra stress in a situation that is already difficult to cope with. 

Which? has been hearing from too many customers struggling with bizarre policy technicalities and shoddy claims service.

Is the FCA aware of the issues?

Sadly, such cases are far from being rare exceptions. The FCA has been publishing various reports and data clearly highlighting industry problems. Last June, it noted that it continues to see ‘substandard service levels across insurance sectors.’ 

And in its latest analysis of home and travel insurers’ claims-handling this July, it concluded there were ‘too many examples of customers not receiving the service they’re entitled to’ - including high rates of claims for storm damage being rejected, inappropriate use of cash settlements that risk leaving customers out of pocket, and lack of adequate oversight or control from insurers.      

It didn't, however, set out clear plans to tackle these issues. And more worryingly, it missed various wider issues - including widespread consumer confusion about home and travel insurance coverage, and low claims acceptance rates generally. Unfortunately, despite a steady build-up of evidence, the FCA has yet to propose clear plans as to how it will improve how these vital markets work for customers.

What is a super-complaint?

If you’re treated poorly or unfairly by a financial company as an individual, you can make a complaint to the firm, which must then review and address it.

A super-complaint is a bit different. It's a complaint that a consumer body can make on behalf of large numbers of customers, where it believes that their interests are being significantly harmed by practices in a market.

Only certain organisations have been given the legal power to make super-complaints as consumer bodies.

Which? is the UK's consumer champion and has this legal power. The last super-complaint we launched was in 2016, over our concerns about banks’ treatment of victims of authorised push payment fraud. While initially rejected by the Payment Systems Regulator (PSR), the government eventually legislated to protect bank transfer fraud victims by introducing a mandatory system of reimbursement.

What Which? is calling for

Our super-complaint isn’t about individual insurance firms - but about widespread problems in home and travel insurance, and the failure of the FCA to definitively tackle them. We think that, as a result, too many customers are being sold policies that don’t end up delivering as expected, and that claims-handling service levels aren’t up to scratch. 

In our complaint, we identify three key areas in which we want the regulator to take action:

• We think the FCA needs to urgently intervene to tackle the failure of home and travel insurance firms to comply with their legal obligations, taking enforcement action where necessary. 
• We want the FCA to launch a market study (a kind of in-depth investigation of the market) to get to the bottom of what’s driving poor consumer outcomes for home and travel insurance customers.
• We also propose that the FCA and government work together to review consumer protections in insurance, and how well those currently in place are really working in practice.

Find out more: our super-complaint in full

How could the FCA respond to Which?'s super-complaint?

The FCA has 90 days to review and respond to the super-complaint.

It could decide to take a number of actions as a result - including taking enforcement action against insurers, agreeing voluntary changes with the industry, conducting further investigations of its own, or recommending action by another body - such as another regulator or the government.

It could also decide that the complaint is unfounded or conclude that it requires no action. We’ll keep you updated - but in the meantime, you can find out more about our campaign by following the link below.

• Find out more: learn about our campaign and sign our petition

'Serious failings have been tolerated for too long'

Rocio Concha, Which? Director of Policy and Advocacy said: 'Which? using its legal powers to submit a super-complaint is a major intervention - but we believe it is necessary as serious failings in home and travel insurance have been tolerated for too long by the insurance industry and its regulator. 

'Our evidence that the home and travel insurance markets are not working well is overwhelming, and we have heard heartbreaking stories from people who have found the experience of dealing with an insurance company worse than the distressing life events that led to their claim. 

'It’s time for the FCA to get a grip on the home and travel insurance markets and urgently intervene to make sure insurers up their game. This super-complaint should mark a turning point that leads to fundamental changes in how insurance companies treat their customers.'

ABI: 'We will engage with Which?'

A spokesperson for the Association of British Insurers (ABI) said: 'Insurers take their responsibility to protect their customers incredibly seriously. As a crucial financial safety net, our members work hard to ensure their customers know the details of their policy cover and handle claims as quickly and efficiently as possible.

'In the first half of this year alone, insurers have paid out over £1.7bn for more than 300,000 home insurance claims. Last year, travel insurers also paid out £472m across more than 500,000 claims. 

'We’re working closely with the regulator to ensure good outcomes for customers and will engage with Which? to understand the details of its concerns.'

What you can do if your insurer has treated you unfairly

If things get rocky between you and your insurer - whether it’s a matter of unreasonable delays, confusing communications or what seems to be an unfair claims decision - there are steps you can take to improve your situation.

1. Be familiar with the policy wording. Get this vital step right, and you’ll hopefully be spared a lot of grief should you need to claim. You might not read the policy wording cover to cover, but at least have a think about which cover features are important to you - and then check what the wording has to say about these. Our research suggests that many customers get by on assumptions, which are then tested when it comes time to claim. 

2. Declare if you have vulnerabilities. If you have any characteristics of vulnerability (such as a health problem, if you’re struggling financially or have experienced a recent difficult life event), let your insurer know. Insurers are supposed to take on board any challenges you’re facing when dealing with your claim.

3. Tell the insurer if you’re unhappy with it. Make a formal complaint to the insurer. In writing is best. Explain what’s gone wrong from your point of view, the difficulty it’s caused, and what you’d like the insurer to do to set it right. Insurers have to review and respond to you within eight weeks. And while the insurer won’t necessarily agree with you, complaints can be surprisingly effective. More than half of the complaints made in the second half of 2024 were upheld by the insurer.

4. 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 it hasn’t, the insurer has to do what the FOS tells it to do to address the problem. It’s a free-to-use service, but it can take several months to process complaints.