The Financial Ombudsman Service (FOS) has sounded the alarm over the increasing number of building insurance complaints lodged to their office in the past 10 years, according to a Sky News report.
The Sky News report noted that more than 2,000 complaints about building insurance were lodged with the FOS in the first three months of 2024, which is 13% higher compared to the previous year. The report also stated that the majority of the complaints pending were about applications being turned down, followed by delays in processing claims, and then the values of claims, with 41% of cases upheld by the FOS.
“It’s concerning to see this significant change in the number of unhappy consumers,” FOS director Sean Hamilton (pictured) told Sky News.
Last year, the FOS also saw a soaring number of complaints regarding motor insurance claims.
The report stated that the primary cause of this issue is the rising number of complaints regarding claims connected to flood or storm damage, which the FOS described as “often complex and expensive.”
The supply chain issue also serves as an aggravating factor to the increasing number of complaints that the FOS has received in the past decade, the report noted.
Hamilton revealed to Sky News that most insurers have had some difficulty in finding the necessary materials and contractors for the rebuilding. This, according to the FOS director, makes the claims substantially more expensive.
Furthermore, the report also noted the rising concern over alternative accommodation, with several customers complaining about having to repeatedly move between hotels at short notice. What makes it worse, the report stated, is that most insurers told their already irate clients they cannot provide any alternatives at all.
In addition to supply chain and accommodation issues, miscommunication also played a key role in the rising complaints in building insurance claims, according to the report.
“Poor communication was a common theme, especially in cases involving third parties, like loss adjustors and surveyors,” the report stated. “Overall, the vast majority (80%) of complaints involved such third-party agents, according to a sample of final decisions made by the FOS.”
The report explained that the more people get involved in the cases, the more confusing it gets, thus, the more that the FOS to withhold the cases, temporarily.
"We've heard from consumers who find themselves locked in a confusing chain of communication with no one party taking responsibility, and significant delays in settlement," Hamilton told Sky News. “Firms need to ensure they're meeting their regulatory obligations by clearly communicating with policyholders, engaging throughout the process and settling claims without unnecessary delays.”
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