The spotlight has fallen on insurance companies in a way it simply never has before after the Financial Conduct Authority (FCA) took the decision to publish data on individual insurers, revealing an effective scorecard that it hopes will lead to more transparency for consumers.
The regulator has revealed details on the companies with whom customers are most and least likely to make a successful claim via their combined buildings and contents insurance policies with data also released on acceptance rates, how frequently claims were made relating to different types of cover and average pay outs.
So which companies stood out?
At the bottom end of the scale, the FCA’s statistics showed that customers of UIA and Zenith have a 20-25% chance of having their claim relating to buildings and contents rejected. The rest of the “bottom five” was made up of
AXA, LV= and CIS.
Gary Humphreys, group underwriting director for
Markerstudy Group, the parent company of Zenith, issued a statement to
Insurance Business to explain his firm’s place in the standings.
“Home insurance currently makes up a very small percentage of our business, 1.03% (percentage of home insurance GWP against the whole GWP for Zenith Insurance in 2016), provided through
Broker Direct,” he said. “Our actual claims acceptance rate is 79.1%, therefore just shy of the higher bracket, with a complaints ratio of just 2.9%.”
“In order to tailor and adapt our policies to meet the needs of the customer, we log all claims even when the policy terms do not cover the claim,” he added. “We constantly evaluate our processes in order to provide the best service possible to the customer and will continue to work closely with Broker Direct going forward.”
Meanwhile at the other end of the scale, the data shows that customers of
Hiscox and Royal & Sun Alliance have a 97.5-100% chance of making a successful claim.
Chubb, Liberty and Cornish Mutual also featured among the upper bracket.
Want the latest insurance industry news first? Sign up for our completely free newsletter service now.
According to Christopher Woolard, executive director of strategy and competition at the FCA, the idea is to offer a wide range of information about the general value of insurance products that goes beyond price alone.
“We expect the pilot publication to help incentivise firms to improve the value they offer consumers,” he explained.
“The pilot will allow us to refine the value measures and obtain further evidence of the effectiveness of these measures ahead of any potential consultation.”
The move to show the value of insurance beyond simply the “cheapest deal” has been welcomed by several insurers, including
Zurich which issued the following statement to
Insurance Business.
“The rise of price comparison services in the past several years has understandably led consumers to focus on the price above all else for their insurance,” the company said. “But there are many factors which make a good, strong and dependable policy so we welcome this move by the FCA to try and find a straightforward way to show what value for money can look like.
“Paying claims is the fundamental purpose of an insurance company - and that’s what people will want to know insurers do. Just one of our products met the criteria for inclusion in this pilot but it is an accurate representation of the proportion of home claims we pay out on across our product suite.
“We opened our own books last year to show this. In the first half of last year alone we paid out over £1bn in the UK, and our average accepted claims rate for consumer home policies was 91%. The majority of those not accepted were due to wear and tear and where people didn’t have the right type of policy cover to support their claim.”
Another key finding in the study, which covered the year to the end of August 2016, according to the FCA, was that there was poor value from many add-ons to insurance products. These include personal accident insurance that is sold with car and home insurance, as well as key cover.
What is your opinion on the data revealed by the FCA? Is it a positive for the industry or a flawed concept? Leave a comment below with your thoughts.
Related stories:
Brokers call out FCA as regulation costs soar 70%
FCA delays decision on PPI claims deadline
