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The Financial Conduct Authority (FCA) has found that while life insurers provide good service to bereaved customers, they need to settle claims quicker and improve how they measure customer experience.
The multi-firm review found evidence of good practice, such as firms providing additional support for claimants throughout what is a difficult time for them. The FCA also recognises firms can face challenges in providing a timely service, such as obtaining the evidence needed to assess a claim.
However, the FCA has found that many firms still have further to go to meet its expectations, particularly in the measurement, monitoring, and delivery of good service outcomes for customers.
The FCA found that firms took, on average, between 53 and 122 days to process a claim, from start to finish, for a term insurance policy, within 36 days for group life cover, 20 days for over 50 plans, and 53 days for whole of life. However, measurement is inconsistent as few firms captured these figures.
The FCA will be engaging with industry to collectively improve customer outcomes and address the findings. The regulator will do further work to understand what changes have been made and will take action if it doesn't see improvements.
Matt Brewis, director of insurance at the FCA, said:
'The loss of a loved one can be intensely stressful and we expect firms to offer the right support to help their customers during this difficult time.
'We expect all life insurers to act on our findings and avoid unnecessary delays with claims.'
Following the introduction of the Consumer Duty in July 2023, firms are required to ensure consumers are at the heart of their business and must act to deliver good outcomes for them.
Notes to editors
- Read the multi-firm review
- The review was based on data requested from 15 life insurers, representing over 75% of the life protection market. The FCA asked firms to set out their customer journeys for life products within four categories: term insurance, group life cover, guaranteed over-50 plans and whole of life insurance.
- In September 2023, the FCA issued a Life insurance letter raising a series of concerns about poor customer services being delivered to customers. We highlighted slow transfer and claims settlement times in particular.
- The FCA decided to look at bereavement claims, as this is a point when customers may have a higher chance of demonstrating characteristics of vulnerability. Life Insurers paid out over 250,000 claims in connection with group and individual protection policies in 2022.
- Term Insurance: a policy that pays a lump sum should the policyholder die during a pre-agreed period of time. Group Life Cover: provides life cover through an employer. Over 50 plans: provides guaranteed acceptance for life cover to over 50s. Can be used towards funeral costs, paying debts or leaving some money to a loved one. Whole of Life: provides life cover for the policyholder's lifetime; can be used to meet future liabilities such as Inheritance Tax.
- Find out more information about the FCA.
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