Some insurers are offering cheap premiums to new customers but longer-standing policyholders see year-on-year increases
The Financial Ombudsman Service (FOS) is receiving a growing number of complaints about the price of insurance premiums.
The FOS said it had been suggested that some insurers’ pricing strategies focused on offering cheap premiums to new customers – while at the same time longer-standing customers see year-on-year price increases.
The FCA announced last week proposals to make insurers publish prior year premiums on renewal notices.
The regulator said the proposals aimed to address concerns that some consumers paid higher prices if they stayed with the same insurer, particularly for a long period of time.
The FOS also revealed today that it expected to receive around 30,300 new complaints about insurance in the year to March 2016 – in line with its budget, but 220 more than it received the previous year. This figure excludes complaints about PPI.
The largest proportion of the insurance complaints it receives involve problems with claims.
The majority of the complaints are derived from people who tell the FOS that they feel a policy term has not been fairly applied.
Many other complaints centre on poor communication and issues with the numerous contractors who may be involved in settling a claim.
The FOS added: “Communication is still one of the main drivers of complaints we receive about the selling of insurance policies – whether someone feels a policy isn’t suitable for them or that it isn’t good value.”
PPI
The FOS said that higher than expected volumes of new payment protection insurance (PPI) complaints had an impact on its service.
The Ombudsman anticipates that it will receive around 20% more than the 150,000 it had planned for this year.
It also expects that the next twelve months will be particularly challenging – as the FCA consults on introducing a deadline for complaining about mis-sold PPI.
This has the potential to lead to an increase in PPI complaints in the short-term – although in the medium term, it should lead to a more predictable workload, the FOS added.
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