A third of car insurers rated poorly by claimants for payouts, Which? research reveals
The new findings come just a week after the financial regulator said it had concerns about insurers’ valuation of written-off or stolen cars, with some insurers only increasing the initial settlement values after the customer has complained.
The FCA has repeatedly warned insurers about acting in this way, and last week said it ‘may ask firms to explain the actions they have taken in response to this publication.’ The consumer champion believes this does not go far enough to tackle the issue.
Following the FCA's recent announcement, Which? research also shows that consumers are feeling ripped off by their insurers. Eight out of 24 providers scored just two stars out of five for settlement values in Which?’s annual survey.
Providers only mustering two stars for settlement values include: AA, Admiral, Bank of Scotland, First Central, Halifax, Quotemehappy.com, Sainsbury’s Bank and Swinton Insurance.
The consumer champion is concerned that some insurers may potentially be lowballing motorists when they make a claim after an accident. And despite the regulator's findings consumers have no idea who the poor performing firms are.
Which? was contacted by a couple who had been involved in a car accident in February this year after another car drove into them. Their car - a second hand Kia Sportage, which was bought for £12,395 in November last year - was written off as a result.
Their insurer, Hastings Direct, which asked them about the value of their car at the time of starting the policy, initially offered the couple a settlement of £8,400, £4,000 short of the price the couple paid for the car. After the couple refused the first offer, Hastings came back with £8,610, which was also refused.
Hastings then asked their own expert to value the car and their third offer was £9,285 - still over £3,100 short of what the couple paid and £885 more than Hastings first offered.
Hastings Direct told the consumer champion that it “aims to settle claims quickly and fairly and in line with the current market value of a vehicle that is written off.” They said that in this case their initial offer was based on the vehicle information available at the time and they updated this offer once further information was received, but they apologised for the payment delay.
Rocio Concha, Which? Director of Policy and Advocacy, said:
“Claiming for a car accident is already a stressful ordeal, but our research suggests it’s becoming even more so due to insurers offering low payouts.
“It’s concerning to see that a third of firms analysed are rated poorly by customers for their payout values, despite repeated warnings from the regulator not to undervalue cars when settling claims.
“There is ample data available to firms and regulators on car values by age, and firms are obliged under the Consumer Duty to demonstrate fair value. The FCA must now insist that firms take action to assure customers they will get a fair price for their vehicle should they need to claim, without undue hassle or needing to complain to get a better offer.”
-ENDS-
Notes to Editors
In November 2023, Which? surveyed 2,793 car insurance policyholders who have claimed in the past 2 years. The sample is a mixture of general public and Connect members
NFU Mutual did not receive a high enough sample size to receive a customer rating on settlement value.
FCA - FCA finds concerns over insurers’ valuation of written-off or stolen vehicles - March 2024
FCA - Insurance providers warned not to undervalue cars or other insured items when settling claims - December 2022
Right of replies
A spokesperson from Hastings Direct said:
“We aim to settle claims quickly and fairly and in line with the current market value of a vehicle that is written off. In this case, we made an initial offer based on the vehicle information available. However, following receipt of further information about the vehicle, including an engineer’s report and photos, we offered an updated offer of £9,300 to the couple and they accepted this amount. We have apologised for the payment delay and are pleased the couple are happy with this outcome.”
About Which?
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