Briefing: If claims is the shop window, I’m not buying

By Matt Scott

Insurance is all about the promise that insurers make to their policyholders to put things right should the worst happen.

The problem for the industry right now is that too many insurers are failing to deliver an adequate claims experience, let alone an exceptional one.

My own analysis of Financial Ombudsman Service (FOS) complaints data for Insurance DataLab found that some 68% of complaints referred to the ombudsman relate to the claims process.

For some lines, like buildings insurance, this figure climbs as high as 81%.

The ombudsman itself has even called out the industry for its claims experience. FOS chief executive and chief ombudsman Abby Thomas criticised insurers last year for delays in paying out claims, describing the practice as “unacceptable”.

“We expect insurers – as well as other businesses – to treat their customers fairly and in a timely manner,” she added.

And, as recently as this month (April 2024), we heard how claims handlers themselves are getting frustrated with mounting delays and the struggles they face in retrieving and reviewing claims documents and evidence.

Worryingly, some 20% of these claims handlers also said they were facing calls from consumers for greater transparency in the claims process – something I’m sure the regulator will be looking at as it continues its work on Consumer Duty.

These figures were published in the Customer experience: The claims handler’s perspective report by Insurtech Sprout.ai.

Must do better

For an industry like insurance, this standard is simply unacceptable and more needs to be done to rectify the situation before the industry falls victim to another reputational crisis.

Insurers need to do a better job of managing expectations throughout the claims process and ensuring that workflows are as streamlined and as efficient as they can be.

Technology will undoubtedly play a part in this, but the impact of communication cannot be underestimated – sometimes just keeping the client informed as to the status of a claim and why a delay is taking place is enough to prevent a complaint and keep a customer happy.

Insurers must also do a better job of communicating what is and isn’t covered by a policy at the point of quote to close the expectation gap that has plagued the industry for years.

They say that claims are the shop window through which policyholders view the insurance industry and, right now, I’m not buying what’s on offer.