Which? finds rise in insurers causing 'distress and inconvenience'

Which? analysis of complaints data from the Financial Ombudsman Service (FOS) has found there has been a surge in insurers causing 'distress and inconvenience' to customers over the past five years.

We looked at more than 8,500 final complaint decisions about home, pet, travel and motor insurance that the FOS upheld – meaning the ombudsman ruled in the customer’s favour – between 2019 to 2023. 

Using artificial intelligence to help crunch the data, we found reports of 'distress and inconvenience' were recorded in 64% of complaints upheld last year, up from 53% of complaints five years ago. 

This means customers faced obstacles or difficulties that had a negative emotional or practical impact and could have been avoided by the insurer. For example, if a customer has to repeatedly contact their insurer to resolve an issue, or have been left without a vehicle or hot water for a period of time while a claim was resolved.

Read on to find out which providers are causing the most distress and for advice on how the FOS can help you if you have an unresolved dispute.

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Which providers are causing high levels of distress?

Our analysis found four insurers – Advantage Insurance Company, British Gas Insurance, British Gas Services and Hastings Insurance Services – caused distress or inconvenience in at least 70% of upheld complaints.

Hastings Insurance had the highest rates, with 82% of upheld complaints citing distress and inconvenience, followed by British Gas Services (77%),  British Gas Insurance (74%) and Advantage Insurance, which is part of the Hastings Group (72%).

A spokesperson for Advantage Insurance and Hastings Insurance, said they take complaint handling very seriously and understand their 'experience is in line with that of other industry participants'. 

British Gas Insurance and British Gas Services did not respond to requests for comment at the time of publication.  

• Find out more: how to complain to the FOS

What were complaints about?

The number of insurance-related complaints has surged over the past few years. Of the 4,087 complaints received and published by the FOS for home, pet, travel and motor cover in 2023, over half (51%) were upheld. That is up from 41% in 2022 and 40% in 2019. 

The highest number of upheld complaints were about buildings insurance products. Insured customers experienced unfair delays in nearly half (46%) of upheld complaints – more often than any other type of product.

In some cases, poor service provided by insurers was likely to have had a negative impact on the most vulnerable. 

When we looked at travel insurance, for example, we found customers who had a complaint upheld relating to medical issues had also suffered additional distress and inconvenience in nearly two thirds (64%) of cases. 

Waiting for a claim to be resolved by an insurer can also be a huge source of worry. Our analysis found 31% of upheld travel insurance complaints were about unnecessary and avoidable delays.

The number of complaints about home emergency cover was also alarming, given that these customers could have been claiming for basics such as access to hot water or heating. Over the past five years, 38% of upheld grievances contained complaints about delays, while a whopping 73% mentioned avoidable distress and inconvenience.  

• To find out more about our analysis and the findings, you can read the full report here.

'Insurers falling short of expected standards'

Under Financial Conduct Authority (FCA) rules, insurers must ensure they are acting to deliver good outcomes for vulnerable customers. 

In light of our research, Which? is calling on the regulator to take tough action against firms that are persistently failing to meet its requirements, including making sure claims are resolved fairly and in good time.

Rocio Concha, Which? Director of Policy and Advocacy, said: 'The FCA’s expectations are clear, yet it would appear some insurers continue to fall short of the standards expected. The regulator must get tough with poorly behaving companies and take action where necessary.'

How to complain to the FOS

Before you take any complaint to the FOS, you should always try to resolve the dispute with the company first. Follow its complaints procedure, and clearly explain the problem and what you want done about it.

If you've had no joy after eight weeks, then you should ask the company for a ‘final response’ to show you've done all you can to resolve the complaint. If the firm fails to respond within a couple of weeks, then the next step is to go to the FOS. 

Making a complaint to the FOS is pretty simple – just visit the ombudsman's website and fill in a short online form, including as much evidence as you can.

After considering all the evidence, the FOS will write to you and the company with the decision and if there is to be an 'award'. If your complaint is upheld, then this letter will include details of what the company must do to put things right.

While the award is legally binding for the company, that's not the case for the customer. If they therefore choose not to accept the ombudsman's decision, they are free to take legal action through the courts instead.

• Find out more: how to complain to the Financial Ombudsman Service

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1. Inspop.com Ltd for the introduction of non-investment motor, home, travel and pet insurance, who are authorised and regulated by the Financial Conduct Authority (FCA) to provide advice and arrange non-investment motor, home, travel and pet insurance products (FRN310635). Inspop.com Ltd is authorised and regulated by the Financial Conduct Authority (FCA) to provide advice and arrange non-investment motor, home, travel and pet insurance products (FRN310635) and is registered in England and Wales to Greyfriars House, Greyfriars Road, Cardiff, South Wales, CF10 3AL, company number 03857130. Confused.com is a trading name of Inspop.com Ltd. 

2. LifeSearch Partners Limited (FRN656479), for the introduction of Pure Protection Contracts and Private Health Insurance, who are authorised and regulated by the FCA to provide advice and arrange Pure Protection Contracts and Private Health Insurance Contracts.  LifeSearch Partners Ltd is registered in England and Wales to 3000a Parkway, Whiteley, Hampshire, PO15 7FX, company number 03412386.

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4. Alan Boswell Insurance Brokers Ltd (FRN 301), for the introduction of non-investment landlord insurances, who are authorised and regulated by the Financial Conduct Authority to provide advice and arrange insurance contracts. Alan Boswell insurance brokers Ltd is registered in England at Prospect House, Rouen Rd, Norwich NR1 1RE, company number 02591252.

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