The Financial Conduct Authority (FCA) announced on April 9 that it has uncovered no evidence of systematic failings in retail claims handling practices. Last year, the FCA launched a thematic review of claims handling in personal lines, with a particular focus on household and travel products. Based on its findings, the FCA is not proposing any new requirements or rule changes for firms in this area.


The thematic review found that 65 per cent of household insurance customers were satisfied with the way their claim had been handled and 64 per cent of travel insurance claimants were satisfied. The FCA notes that successful claimants had a much higher satisfaction rate.

Significantly, the FCA did not find any evidence of systematic attempts by firms to deny valid claims or ‘squeeze’ settlement costs. The regulator found that delays in claims handling were the result of poor processes or management, rather than deliberate attempts by firms to slow claims down.

The FCA plans to publish the full report in May but the initial findings are broadly positive and reveal that claims handling practices are perhaps better than the regulator had anticipated. According to the FCA, improvements in the following areas will further increase customer satisfaction:

  • how in-bound claims calls are recorded and used;
  • the ownership of a claim and communication with clients whilst it is being progressed;
  • management of supply chains in household insurance claims;
  • how medical conditions are dealt with in travel insurance;
  • handling of claims with long chains of delegation; and
  • clarity of product documentation.

Commercial claims review

The FCA announced in its business plan for the coming year that, building on its retail claims work, it will shortly be investigating commercial claims, specifically whether commercial customers’ expectations are met in the claims process and where poor behaviour could have a wider impact on trust in the market. Clearly, the distinction between the regulatory approach to retail customers and that applied to business’ customers is likely to become blurred further as the FCA broadens its investigatory scope.

View FCA engages with firms on claims handling thematic review, 9 April 2014