The Financial Conduct Authority (FCA) has urged life insurers to improve the speed of settling bereavement claims and enhance how they monitor and deliver customer experience. This follows a recent review that shows significant delays and inconsistencies in handling claims, even as insurers demonstrated examples of good practice in supporting grieving families.
The multi-firm review analysed data from 15 life insurers representing over 75% of the life protection market. It revealed that while insurers often provide support during difficult times, many struggle to meet the FCA’s expectations for timeliness and customer-centric service.
On average, claims for term insurance policies took between 53 and 122 days to process, while group life cover claims averaged 36 days, the FCA noted. Over-50 plans were settled in 20 days, and whole-of-life claims took an average of 53 days. However, the FCA found inconsistent data collection across firms, making it challenging to measure and compare performance effectively.
In a statement, Matt Brewis, director of insurance at the FCA, emphasised the need for firms to prioritise timely claim settlements, particularly given the stress bereaved customers face.
“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,” Brewis said. “We expect all life insurers to act on our findings and avoid unnecessary delays with claims.”
The review acknowledged the challenges insurers face, such as obtaining necessary evidence to process claims. However, with the introduction of the Consumer Duty in July 2023, firms are required to put consumers at the centre of their operations and deliver positive outcomes, the FCA noted.
A news release noted life insurers paid over 250,000 claims in 2022 across individual and group protection policies. The review focused on four product categories: term insurance, group life cover, over-50 plans, and whole of life insurance.
The FCA said it plans to follow up with life insurers to assess the implementation of improvements. It also highlighted its commitment to working with the industry to address these issues, including engaging with firms to implement improvements. It warns that further action would follow if significant progress is not made.
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