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Motor and buildings insurance complaints to ombudsman hit five-year high

Complaints to the financial ombudsman about motor and buildings insurance have reached a five-year high.

The Financial Ombudsman Service (FOS), which released the figures, said that where complaints are being driven by delayed payouts, that is unacceptable.

The Association of British Insurers (ABI) said it is concerned by the figures and will work with its members and the FOS to understand where improvements can be made.

Between April and June 2023, the FOS received 3,869 complaints about car and motorcycle insurance, alongside 1,776 buildings insurance cases.

It was the highest combined quarterly total number of new complaints about buildings and motor insurance since April to June 2018.

Customers of financial services firms can take complaints to the ombudsman if they cannot reach an agreement with the firm.

Just over a third (36%) of car and motorcycle insurance-related complaints were upheld in favour of the consumer between April and June, as were four in 10 (40%) buildings insurance complaints.

The increase appears to be caused by several factors, including complaints about delays on claims payouts, the service said.

Contractor availability has also impacted on the speed of repairs, as has the ability to source materials, it added.

Travel insurance complaints have also doubled in a year – increasing from 504 to 1,101 during the latest quarter.

Abby Thomas, chief executive and chief ombudsman at FOS, said: “Whether it’s your car, your holiday or your home, having the right insurance is fundamental and should offer people the peace of mind that, when things go wrong, they’re protected.

“Where these complaints are driven by insurers delaying paying out on claims that’s unacceptable. We expect insurers – as well as other businesses – to treat their customers fairly and in a timely manner.

“If consumers don’t feel they’ve been treated fairly by a financial business, they should contact our free, independent service and we’ll investigate their complaint.”

Rachel Lam, the ombudsman director responsible for insurance, said: “Following the pandemic, confidence around travel is growing again, and with that a greater awareness of the need for insurance.

“We need to ensure that, alongside the growth in travel policy sales, the industry continues to behave responsibly, and consumers feel satisfied with the service they are provided.”

An ABI spokesman said: “We’re concerned to see these latest complaints figures from the Financial Ombudsman Service.

“Insurers work hard to process claims as quickly and efficiently as possible whilst managing challenges beyond their control that can impact on timings, such as delays to car repairs.

“However, clear and timely communication is vital to support the customer throughout any claim. We’ll work with our members and the FOS to understand where improvements can be made, in particular any learnings from the complaints that have been upheld.”

Recent figures from data analytics firm Consumer Intelligence indicate the average premium quoted for a buildings and contents policy was £212 in July, marking a 25.7% increase compared with a year earlier.

The ABI released its latest insurance premium tracker in August, which found that the average price paid for motor insurance had surged by just over a fifth (21%), or nearly £90 in cash terms, annually, to reach the highest levels since records started in 2012.

The average premium paid for private comprehensive motor insurance in the second quarter of 2023 was £511.

Earlier this month, the ABI said a record £2.5 billion in motor claims was paid out in the second quarter of this year.

This was the highest quarterly figure since the ABI started collecting data in 2013 and a 29% jump compared with the same quarter last year.

Alongside complaints about insurance, the other most complained-about products this quarter were current accounts, credit cards and hire purchase (motor).

Complaints about all these products have increased year on year, the service said.

Current accounts continue to be the most complained-about product overall, with 7,224 complaints recorded in the second quarter and gripes about scams helping to push the figures up.

Complaints which were categorised as account closures made up 5% of current account complaints, the service said.

Overall, the ombudsman received 43,953 complaints in the latest quarter, compared with 35,029 during the same period a year earlier. It upheld 37% of the complaints it resolved.

Rocio Concha, Which? director of policy and advocacy, said: “Buying car insurance is a legal requirement for motorists, yet Which? research has found that customers are not only having to chase their provider over claims, but over three-quarters of car insurance customers reported they were not given an explanation by their insurer for rejected, partially accepted or disputed claims.

“While the Financial Conduct Authority’s new consumer duty should help to make firms raise their game when it comes to providing adequate customer service, with easy-to-understand terms and conditions, insurers have been subject to higher standards for almost two years now.”