Insurers’ behaviour impacting customers’ physical and mental health – Which?

People who had been severely impacted by an event they were claiming for were more likely to report problems in the claims process.

A consumer duty was introduced in July 2023, meaning financial firms need to put customers at the heart of what they do (Yui Mok/PA) (PA Archive)

Nearly half (48%) of people who have made a claim about home, travel, motor and pet insurance experienced at least one problem during the process, according to Which?

Problems included needing to repeatedly chase insurers for information and firms not identifying and responding appropriately when people were struggling as a result of the incident that led to their claim.

Issues also surfaced in situations where insurers brought in third parties to deal with claims, the consumer group said.

This research paints a shocking picture of insurers' failure to handle customers' claims in a timely, empathetic way

Rocio Concha, Which?

A consumer duty was introduced in July 2023, meaning financial firms need to put customers at the heart of what they do, including when designing products and in their communications.

Some customers felt harassed for hard-to-obtain information about seriously ill or deceased family members – before being told the records were not necessary after all – Which? said.

The research indicated that vulnerable customers are sometimes being failed, it added.

People who had been severely impacted by the event they were claiming for were more likely to report problems in the claims process than those who had not, at 63% versus 33%.

In one case seen by Which? a woman cancelled a family holiday to Spain after her father-in-law had a stroke. After she contacted her insurer, she was asked to upload relevant claim documents to the online portal. But after doing so, she was repeatedly asked to upload the documents again, despite receiving email notifications to say they had been received.

Which? said the process lasted several weeks.

A spokesperson for Axa Partners, the insurer involved, told Which? it was “sorry for the issues” and acknowledged that on this occasion “the service we provided did not meet the high standards we aim to achieve”.

In another case, a recently-widowed woman was asked by an insurer where her husband was when she called about their policy, despite the firm knowing of his death, Which? said. Sentimental items had been stolen during a burglary shortly after her husband had died.

It’s particularly concerning to see how people in vulnerable circumstances due to the event that led to their claim are being failed by their insurers

Rocio Concha, Which?

The research also indicated that insurers’ behaviour had an impact on customers’ physical and mental health. Nearly a third (31%) said insurers’ actions negatively impacted their stress levels while some had sleep issues or said the claims process affected their physical health.

Rocio Concha, Which? director of policy and advocacy, said: “This research paints a shocking picture of insurers’ failure to handle customers’ claims in a timely, empathetic way – and it’s particularly concerning to see how people in vulnerable circumstances due to the event that led to their claim are being failed by their insurers.”

Which? commissioned 24 in-depth interviews with recent claimants, alongside a YouGov survey of more than 3,300 insurance claimants in February.

A spokesperson for the Association of British Insurers (ABI) said: “Insurers’ first priority is to support their customers, and the vast majority of claims are accepted and handled quickly.

We welcome any opportunities to work with regulators, external experts and charities, as well as our members, to understand what further support can be provided

ABI spokesperson

“Our members know that having to make a claim usually means an individual has already experienced incredibly stressful circumstances, and they want to make the process as easy as possible. It’s always concerning to hear when that isn’t the case and they will try to deal with complaints efficiently and fairly.

“When complaints are passed to the FOS (Financial Ombudsman Service), we and our members will work with the ombudsman to understand any opportunities to learn from them and improve processes.

“Identifying whether a customer may be in vulnerable circumstances is an issue of continuing importance for our sector. We’ve set out guidance on the steps firms can take to deliver the most suitable customer service and cater to individual needs, which includes reviewing training needs for frontline staff regularly.

“We recognise however that there is still more to be done and we welcome any opportunities to work with regulators, external experts and charities, as well as our members, to understand what further support can be provided.”