Life insurers have been urged by the City regulator to speed up the processing of claims and enhance customer experience, as per a Wales Online report. The Financial Conduct Authority (FCA) highlighted that while some firms demonstrate good practices by offering additional support to claimants during challenging times, there is still room for improvement across the board. The FCA’s review, which involved data from 15 life insurers representing over 75% of the market, identified various areas where enhancements are needed, particularly in measuring, monitoring, and delivering prompt and efficient service outcomes.
In the review, life insurers were asked to outline their customer journeys for different life products, including term insurance, group life cover, over-50 plans, and whole-of-life insurance. Term insurance pays a lump sum if the policyholder passes away within a specified period, while group life cover is provided through employers, over-50 plans offer guaranteed acceptance for life cover to individuals over 50, and whole-of-life insurance covers the policyholder’s lifetime. The FCA discovered that on average, firms took between 53 and 122 days to process a term insurance claim, 36 days for group life cover, 20 days for over-50 plans, and 53 days for whole-of-life insurance.
The regulator noted that while some firms provided these figures, the measurement process was inconsistent across the industry. Matt Brewis, the FCA’s director of insurance, emphasised the importance of firms offering appropriate support to customers dealing with the loss of a loved one and urged life insurers to act promptly on the findings to avoid unnecessary delays in claims processing. With the introduction of the Consumer Duty in July 2023, companies are mandated to prioritize consumers’ interests and ensure positive outcomes for them.
According to data from the Association of British Insurers (ABI) and Group Risk Development (GRiD), a record £7.34 billion was paid out in claims for group and individual protection policies in 2023 to support individuals facing bereavement, illness, and injury. The ABI highlighted the critical need for timely support, especially in distressing circumstances when making a claim. Collaborative efforts between industry stakeholders and regulators are underway to identify opportunities for improvement and establish a more consistent approach across the sector to enhance service outcomes for customers.
It was also mentioned that the FCA will engage with the industry to collectively work towards improving customer outcomes based on the findings of the review. The regulator will continue to monitor changes implemented by firms and will take necessary actions if improvements are not observed. The call for increased efficiency and better customer service in the life insurance sector reflects a commitment to prioritising policyholders’ needs during challenging times and ensuring a more transparent and responsive claims process for all customers.