Insurance complaints at all-time high, FOS reports

The Financial Ombudsman Service (FOS) has reported a 20% jump in non-PPI insurance complaints to 33,172 in the year to 31 March 2013.

The FOS said in its annual review, released today: “This is the highest number of insurance complaints we have received in any year since we were set up in 2000.”

The FOS also reported a 140% surge in payment protection insurance (PPI) complaints to 378,699 (2012: 157,716).

The increase in non-PPI insurance complaints included a 7% rise in motor insurance complaints, a 24% rise in disputes involving commercial vehicles and property and a 50% increase in pet insurance complaints.

It also included a 60% increase in building warranty cases and an 85% rise in private medical insurance disputes.

Offsetting this was a 3% drop in complaints about contents insurance, an 11% fall in caravan insurance disputes and a 13% decline in home emergency cover complaints.

Motor woes

The FOS said the 7% rise in motor insurance complaints – the largest non-PPI area – in the year to 31 March 2013 followed a 26% increase the previous year.

It added that the proportion of motor complaints it upheld in favour of the consumer, at 47%, remained higher than in other areas.

The report said: “These trends continue to reflect the tougher economic times. But as we noted in last year’s annual review, they also reflect the increased number of entrenched disputes where neither side is prepared to reconsider their position or agree to informal mediation.”

The FOS also noted in the motor complaints area a 60% rise in disputes over non-disclosure by the consumer.

However, the FOS laid the blame in part on insurers. The report said: “Many of these non-disclosure complaints could have been avoided if the insurer had asked the consumer clearer questions when they first applied for the policy.

“For example, we also continued to see problems where insurers asked only general questions about convictions, when they actually wanted to know specifically about any fixed penalty points.”

The FOS also blamed the rise in part on confusion caused by price comparison sites. The report said: “This happened, for example, where the comparison sites had made certain assumptions about the consumer and had automatically filled in some of the information.”

“We have talked about this with the Association of British Insurers (ABI) – as part of out work to feed our experience back to the insurance sector – and suggested where insurers might want to remove some of the ambiguity that can arise when consumers use these websites.”