For the first time the ABI publishes general insurance claims statistics in the UK, in an attempt to educate consumers
UK Insurers are subjected to regular criticism in the national press and media for refusing genuine insurance claims, from protection to general insurance – home, motor or travel insurance. One of the reasons AngryPolicyholders.com was setup was a resulted of a genuine claim made by one of our founders being refused by Scottish Provident.
Over the past three-to-four-years, AngryPolicyholders.com has helped consumers obtain redress when a genuine claim was incorrectly refused – 98 per cent of claims refused were later honoured. However, considering why we were founded it would be very easy to jump to conclusions with headline figures of 525,000 refused claims totalling £1 billion in the last two years.
Whatever side you may be on, like it or not insurers do pay out in the vast majority of cases, with pay-outs as high as 99.9 per cent for certain policies. But – and there is always a but – insurers should be named and shamed when they try to use exclusions or “get out clauses” incorrectly.
As with all types of insurances there is a joint trust between consumers and an insurer. In the event of a claim the insurer relies on the fact that the policyholder has been truthful and upfront with any information which would be crucial for underwriting a policy, and in return for paying premiums the insurer will act swiftly to settle any genuine claim.
Sadly though there are still misconceptions about pay-outs and lack of transparency by UK insurers. This is one reason why the Association of British Insurers has decided to publish for the first time the number of general insurance claims in the UK, and most importantly the reasons why claims are denied. The analysis of 6.9million claims by 19 insurance companies was carried out to help identify where customers may need more help to understand what they are covered for, and help reduce and avoid the current level of declined claims.
Chris Hargreaves, founder of AngryPolicyholders.com, commenting on the ABI publishing the claim statistics for general insurance said: “Anything that can help educate consumers has to be welcomed. However, it is far to easy to pass the responsibility onto consumers to understand policy documents and terminology.
“There is no excuse for not reading policy documents but the vast majority can be substantial documents with wording that could confuse policyholders, especially the elderly or vulnerable. Also, more has to be done to ensure that insurance companies don’t rush to decisions, especially when denying claims.”
Mr Hargreaves, concluded: “Far too many times we find policyholders in distress and financial hardship because a claim has been incorrectly denied. These claims cover home, contents, car and protection insurance, further proving it’s not just isolated to income protection, critical illness or life insurance claims.”
It is part of the ABI’s programme to improve customer trust and increase transparency announced by ABI Chairman Paul Evans at the ABI Biennial Conference last November. Part of this includes the recent publication of the Renewal Code for Vulnerable Customers, to help participating insurers and brokers identify and help those customers who may need extra guidance to get the best deal at the renewal of their motor and home insurance policies.
Huw Evans, ABI’s Director General, said: “As insurers, we want our customers to have greater trust in us to pay claims when life gets difficult. We cannot earn that trust without being more transparent about how many claims are paid and why a minority of claims are usually declined. That is why the figures we are publishing today are so important.”
|Type of Policy||
Average Claim Paid
% of Claims Paid
Claim pay-out ratio
|Motor – Private||
|Property – Domestic||
Source: Association of British Insurers (ABI)
Mr Evans continued: “Contrary to popular belief, insurers want to pay honest claims. It helps nobody when customers have bought the wrong product or have not disclosed important information. So we will use the analysis we are publishing today to drive awareness campaigns to improve even further the acceptance rates for home and travel. Buying insurance should never just be about getting the cheapest price in the quickest time possible, it should be about ensuring you have the right product for your hour of need.”
In total home insurance claims were rejected the most often – with 378,000 claims denied. Travel insurance claims were denied 104,000 times, whilst car insurance claims were denied 43,000 times. Declined claims for travel insurance were mainly due to: cancellation falling outside of the scope of cover, failure to declare a pre-existing medical condition that led to a claim, no substantiation for the loss of items, and the claim being below the policy excess.
The main reasons for a building or contents insurance claims being denied were: wear and tear or damage caused by a lack of maintenance which are not insurable, the claim value being below the policy excess, and not having bought the right cover, such as accidental damage, which is often an added extra.
AXA insurance publishes its own claim figures and found the most common reason for a claim being denied were for people not locking their vehicles, driving whilst under the influence of alcohol or when vehicles were lent to someone else.
AXA UK chief executive, Paul Evans said: “Although the vast majority of claims are paid, there is still work to be done in making it absolutely clear to our policyholders, not just what their policies covers, but also what it does not cover and we will continue to look for new ways to do that.”
In separate figures published on Tuesday, the Financial Ombudsman Service said there were 5,504 inquiries about buildings insurance from disgruntled customers between April and December last year. Some 38% of cases looked at by the ombudsman were upheld in the customers’ favour.
Cases were dwarfed by the 178,715 enquiries about payment protection insurance (PPI) received over the same period. In PPI cases, 70% were upheld in the customers’ favour.
Check out AngryPolicyholders.com guides to making a successful claim, avoiding breaching terms and condition or leaving yourself exposed to a denied claim:
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