Biba 2013: FCA to launch personal lines probe

The Financial Conduct Authority (FCA) is launching a probe into personal lines claims, chief executive Martin Wheatley told delegates at Biba 2013.

In his opening address, Wheatley said the new regulator would use a thematic review to find out how claims were paid, and the efficiency of claims processes.
Wheatley said: “We will be looking at the extent at which firms are delivering on their obligation to pay out valid claims, how good insurers are at explaining [the process] up-front when a claim is made, how well they then keep them informed of progress, are payments made in a fair and consistent way, and are firms acting ethically towards their customers.”

Personal lines claims is the third thematic investigation area run by the FCA, and follows others looking into the mis-selling of add-on products and the effects of reward structures on the sales techniques of the insurance industry.

‘Increasing concerns’

The new chief executive said the investigation was in response to growing worries about the personal lines sector.

“There are increasing concerns that claims are not being dealt with properly, not being paid or being paid out in a very slow manner,” Wheatley said. “We don’t want to see people under distress having further distress added by having a rightful claim being badly administered.”

In a warning to the industry, Wheatley said that the FCA would not allow brokers and insurers to rely on consumers understanding the products they were buying. He said brokers would need to ensure the products were suitable for the specific client in question and take into account the knowledge of the consumer and their ability to understand the product.

“The important thing is to have a proportionate response,” Wheatley said. “Sometimes you are dealing with professionals who do understand. Sometimes you are dealing with functionally illiterate individuals where there is a greater burden [to explain the details].”

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