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Life insurers need to settle claims more quickly and improve how they measure customer experience, the City regulator has said.
The Financial Conduct Authority (FCA) said a review had found evidence of good practice among firms, including additional support for claimants through a difficult time.
The FCA said it also recognises the challenges in providing a timely service, such as obtaining the evidence needed to assess a claim.
However, the regulator found that many firms have further to go to meet its expectations, particularly in the measurement, monitoring and delivery of good service outcomes.
The review was based on data requested from 15 life insurers, representing over 75% of the market.
We expect all life insurers to act on our findings and avoid unnecessary delays with claims
Matt Brewis, FCA
It asked them to set out their customer journeys for life products in four categories: term insurance, group life cover, guaranteed over-50 plans and whole-of-life insurance.
– Term insurance pays a lump sum should the policyholder die during a pre-agreed period of time.
– Group life cover provides life cover through an employer.
– Over-50 plans provide guaranteed acceptance for life cover to over-50s. They can be used towards funeral costs, paying debts or leaving money to a loved one.
– Whole-of-life insurance provides life cover for the policyholder’s lifetime. It can be used to meet future liabilities such as inheritance tax.
The FCA found that firms took, on average, between 53 and 122 days to process a claim from start to finish for a term insurance policy, within 36 days for group life cover, 20 days for over-50 plans, and 53 days for whole-of-life.
It cautioned that measurement is inconsistent as few firms capture these figures.
The FCA said it will engage with industry to collectively improve customer outcomes and address the findings. It will do further work to understand what changes have been made and will take action if it does not see improvements.
Matt Brewis, director of insurance at the FCA, said: “The loss of a loved one can be intensely stressful and we expect firms to offer the right support to help their customers during this difficult time.
“We expect all life insurers to act on our findings and avoid unnecessary delays with claims.”
After the introduction of the Consumer Duty in July 2023, firms are required to ensure consumers are at the heart of their business and must act to deliver good outcomes for them.
