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Is the slow Insurance Claims Train starting to move?
04 December 2023

We are finally progressing with some of the frozen and burst pipe repairs from December 22...

We are finally progressing with some of the frozen and burst pipe repairs from December 22... But it doesn’t mean that insurance brokers are less busy, or that insurance companies are improving. We reflect on what might have caused this year’s property insurance claims backlog.

Following an increase in complaints about insurance claims, the FCA uncovered examples of lengthy complaints handling times and people not receiving appropriate settlements, plus 57% more property claims being rejected since 2022. Some firms also failed to show they were adequately able to identify vulnerable customers in need of additional support - something we’ve witnessed with clients we have carried out work for.

In the spirit of fairness, the FCA did find some examples of good practice but for this article, we’re looking at projects we’re involved in, where residents have waited since last December for movement on their claim.

'Timely and fair claims handling is especially vital during the cost of living squeeze.’

Sheldon Mills, Executive Director, Consumers and Competition at the FCA, said:

Unreasonable waits and inefficient processes

In this newsletter, we share progress on two projects from last December’s ‘big freeze’, which caused extensive water damage from frozen and burst pipes. Being involved from the outset, as a contactor carrying out emergency work, stripping out and then successfully tendering for full reinstatement works, we could see first-hand how painfully slow and overstretched insurers and their appointed representatives were, and we know that a 6-week wait for a claim to be set up – let alone resolved and remediated – is not unusual.

Enabling a policyholder to make a claim is core to providing an insurance service so timely claims handling is not an unreasonable demand. This is more vital than ever during a cost of living* crisis, when pockets are being squeezed and numbers of vulnerable customers are higher.

What do people do with/in their property and where do they go, whilst processes fail? There are reports of customers being left for weeks without water following a leak or flood and people being forced to live in fire-damaged properties for extended periods of time, without the offer of alternative accommodation. With high rents and lack of housing stock, some tenants are not able to find or afford alternative rented accommodation.

Where does the cause lie?

The unreasonable waiting times over the last few years started somewhere, but identifying just one cause is almost impossible and it seems we may simply be facing a perfect storm.

‘Covid times’ have been blamed for many supply chain issues and the insurance industry may be another victim of remote working and remote onboarding creating a skills crisis. Recruitment was carried out hard and fast across multiple industries to fill gaps in staff rotas, and customer-handling and technical training was often just enough to sustain base-level operations. Processes require continuity and from the claims delays we see, the core of the problem seems to be lack of training around procedures and the technical aspects of insurance policies and wording.

Claims are not dealt with continuously or consistently and many brokers find themselves acting as interpreters and middlemen, sourcing quotes, and coordinating projects, to help their policyholder customers. But the question must be asked: why is this still a problem, now?

AI and advanced technology provide excellent solutions for simplifying procedures, significantly streamlining the claims process and expediting resolutions. We know some insurance companies are ‘on it’ technologically, but on the frontline we’re still waiting for claims to be properly processed and quotes approved...

As Liz Tytler, Head of Claims at Movo Partnership stated recently in Insurance Age: “The insurance industry is currently living up to the stereotype that it is quick to take a premium but doesn’t want to settle claims. Better claims performance drives better business performance - more trust, more new customers, more renewals, more profit.” (blog: Why is claims in such a mess?, 18/10/23)

Read our Frozen and Burst Pipe Project updates

Mrs Watkins in Rossendale

Mrs Greaves in Blackpool