The issues that arose in the Which? report included insurers failing to ensure vulnerable customers received the service they ought to have had.
As well as encountering problems with insurers, almost half also experienced “widespread industry failures” to deliver the service levels the Financial Conduct Authority (FCA) expects.
A further issue was the inclusion of third parties by insurers in handling claims, the report found.
Claims involving a contractor to assess them were twice as likely to have problems arise than without, as 60% had problems, whereas 34% of the 3,000 respondents did not.
The repercussions of what customers felt was poor claim handling included sleep issues, which affected a tenth of insurance claimants. A tenth also said they had problems with their physical health as a result of the claim.
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Almost a third (28%) said there were knock-on effects due to their claim.
Travel insurance claim with 10 different advisers
In one case, an Axa Partner customer said they were repeatedly asked to upload medical documents as part of a travel insurance claim after her father had a stroke.
The customer also said she spoke to around 10 different advisers throughout the claim process.
Axa replied to say the claim has now been settled in full.
An Axa spokesperson said: “We endeavour to conclude all travel claims as swiftly as possible, although there can, on occasions, be delays due to the complex nature of some claims. It is crucial we obtain all the relevant information from our customers to enable us to provide considered and accurate claims management that ultimately drives fair outcomes for our customers.
“We deal with over 200,000 travel claims a year, and unfortunately, a small percentage of these do result in a complaint; our ambition is to learn from any complaint and improve the customer experience.”
Consumer Duty was introduced in July 2023 and aimed to improve the service customers received with financial services, particularly those deemed to be vulnerable or struggling financially.
However, over two-thirds (63%) of customers would report a problem during the complaints process, compared to 33% who would not.
Indeed, a separate Moneyhub study revealed that two-fifths of customers saw no difference in the way firms treated them since Consumer Duty was launched.
‘Research paints a shocking picture’
Rocio Concha, Which? director of policy and advocacy, said: “This research paints a shocking picture of insurers’ failure to handle customers’ claims in a timely, empathetic way – and it’s particularly concerning to see how people in vulnerable circumstances due to the event that led to their claim are being failed by their insurers.
“At a time when many consumers face soaring premiums, it’s clear they’re being ripped off – either by abysmal claims handling that doesn’t match up to the price they’re paying, or by unjustifiably high premiums, especially for those who can’t afford to pay for a year’s cover in one go.”
Concha added: “Today, we say enough is enough. The rules for insurers are clear, but the insurance rip-off will not end unless the regulator takes meaningful action against firms that consistently fall short.”
Association of British Insurers’ reply
In response to the research, the Association of British Insurers said: “Our members know that having to make a claim usually means an individual has already experienced incredibly stressful circumstances, and they want to make the process as easy as possible. It’s always concerning to hear when that isn’t the case and they will try to deal with complaints efficiently and fairly.
“When complaints are passed to the FOS [Financial Ombudsman Service], we and our members will work with the ombudsman to understand any opportunities to learn from them and improve processes.”
The trade body added: “Identifying whether a customer may be in vulnerable circumstances is an issue of continuing importance for our sector. We’ve set out guidance on the steps firms can take to deliver the most suitable customer service and cater to individual needs, which includes reviewing training needs for frontline staff regularly.”
The trade body added that it recognises “there is still more to be done” and welcomed industry collaboration to iron out any service issues in the future.
