The Financial Conduct Authority (FCA) has found that motor insurers need to improve how they treat vulnerable customers and handle claims.
The review was triggered by an increase in complaints about insurance claims and revealed lengthy complaints handling times and inadequate settlements for some customers.
The FCA also discovered instances of motor insurance customers being offered prices below their car’s fair market value after it was written off, which it said violates FCA rules.
The regulator has instructed the relevant firms to rectify these issues and provide redress where necessary.
“Timely and fair claims handling is especially vital during the cost of living squeeze,” said Sheldon Mills, executive director, consumers and competition at the FCA.
Some firms were unable to demonstrate effective monitoring of customer outcomes, and the FCA warned that better information sharing is needed when insurers deal with intermediaries to settle claims.
Some insurers also lacked proper identification of vulnerable customers in need of support. The FCA is taking action against firms that violated its rules, and has informed consumers that they can lodge complaints with their insurance companies or the Financial Ombudsman Service if dissatisfied with the response.
Mills (pictured) added: “While we have seen many firms treating their customers correctly, we found too many examples of customers not receiving the service they’re entitled to.
“Where we found issues, we’ve told firms to put them right. We’ll be monitoring them to ensure they do.”
The finance and insurance watchdog’s review did identify some examples of good practice, such as firms offering forbearance, providing dedicated support for vulnerable customers, and using voice analytics and specialized training to identify vulnerable customers effectively.
Alongside the review, the FCA has finalised new guidance for insurance firms about how they should support their customers, providing further clarity to firms about what they should do if they identify customers who are in financial difficulty.