Which? is making a super-complaint to the City regulator over its concerns about “serious failings” in the home and travel insurance markets.
The consumer champion said it is focusing on these two types of insurance because they have some of the lowest levels of claims acceptance rates, and the impact on a consumer when something goes wrong can be significant.
It said some of the stories it has heard from consumers about their experiences have been “heartbreaking”.
The super-complaint, being made to the Financial Conduct Authority, is about the markets as a whole, not specific firms.
Over the past year, Which?’s “end the insurance rip-off” campaigning work has produced research reports which the consumer group said exposes poor customer experiences – from consumer confusion over what is covered by a policy, to “frustrating and substandard treatment” when people claim.
The regulator has carried out in-depth reviews of claims- handling in home and travel insurance, first in 2014 and more recently this summer.
Which? highlighted the FCA’s statutory objective to secure an appropriate degree of protection for consumers.
It said it is launching a super-complaint now “because consumers cannot afford to wait any longer”.
Which? said that as well as surveys and interviews, analysis of Financial Ombudsman Service (FOS) decisions and legal analysis has been carried out.
Its super-complaint focuses on three main concerns – poor claims-handling; inappropriate sales processes; and what it claims is a lack of application and enforcement of FCA rules and other relevant law.
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Which? said it has heard from hundreds of people “who have been left to endure ordeals at the hands of their insurers”.
By law, the regulator has 90 days to respond to Which?’s super-complaint.
Rocio Concha, Which? director of policy and advocacy, said: “Which? using its legal powers to submit a super-complaint is a major intervention – but we believe it is necessary as serious failings in home and travel insurance have been tolerated for too long by the insurance industry and its regulator.
“Our evidence that the home and travel insurance markets are not working well is overwhelming and we have heard heartbreaking stories from people who have found the experience of dealing with an insurance company worse than the distressing life events that led to their claim.
“It’s time for the FCA to get a grip on the home and travel insurance markets and urgently intervene to make sure insurers up their game. This super-complaint should mark a turning point that leads to fundamental changes in how insurance companies treat their customers.”
Which? said the latest FCA general insurance value measures data reports that the claims acceptance rate for home (buildings) insurance was 63% and for travel insurance (single-trip, standalone) it was 80.4%.
Which? said it has heard from an insurance customer whose holiday to Egypt two years ago was curtailed due to a technical issue with her flight two hours after take-off. She was unable to go on her holiday.
While her flights were refunded, she was out of pocket for accommodation and travel costs to and from the airport.
Her insurer Axa told her that her flight’s departure meant her holiday had technically taken place and she was not eligible to claim. Which? said that since raised the case with Axa, the company has apologised, settled her claim in full and offered compensation.
A spokesperson for Axa Partners said it apologised for the issues and “upon further review, we have settled her claim in full and offered compensation in recognition of the delays”.
In another case seen by Which?, a water pipe burst under a man’s home, but his insurer, Churchill, told him he was not covered for the damage to the pipe itself. He was told he would have needed to take out extra cover. The customer believes such exclusions should be made much clearer to customers when they are taking out policies, Which? said.
The man told Which? that Churchill only offered to help with redecoration costs, but in the end, he cancelled his claim with Churchill and paid for decoration costs himself.
A spokesperson for Churchill said a plumber had “confirmed the leak was due to wear and tear of the pipe, which is typically excluded under home insurance policies”.
The spokesperson said the man was advised that he could claim for the plumber’s investigation, damage caused by accessing the pipe, and any water damage caused by the leak but “we advised that the damage to the pipe itself would not be covered”.
The spokesperson said that if the customer is able to provide further documentation about the repairs to his property, “we will be happy to review the claim”.
A super-complaint is a complaint submitted by a consumer body on behalf of large numbers of customers, where it believes that their interests are being significantly harmed by practices in a market.
Only certain organisations have legal powers to make super-complaints as consumer bodies.
Which?’s last super-complaint was submitted in 2016 over its concerns about banks’ treatment of victims of authorised push payment (APP) fraud. While initially rejected by the Payment Systems Regulator, legislation was later introduced to protect bank transfer fraud victims by introducing mandatory reimbursement.
An FCA spokesperson said: “Insurance should provide peace of mind and fair value. That’s why we have been focused on raising standards, including banning the loyalty penalty, securing £200 million compensation for underpaid motor claims and investigating value in premium finance.
“We uncovered issues when we recently reviewed insurers’ home and travel claims handling. We’ll be holding them and their senior managers accountable for the changes needed.
“We’ll respond to Which? in due course.”
Which? said that home and travel insurance products are widely held by UK consumers, and hugely important for society and the economy.
In 2024, 32 million UK adults held contents insurance and 29 million held buildings insurance, whilst 15 million and 13 million UK adults held annual and single-trip travel insurance, respectively, it added.
A spokesperson for the Association of British Insurers (ABI) said: “Insurers take their responsibility to protect their customers incredibly seriously. As a crucial financial safety net, our members work hard to ensure their customers know the details of their policy cover and handle claims as quickly and efficiently as possible.
“In the first half of this year alone, insurers have paid out over £1.7 billion for more than 300,000 home insurance claims. Last year, travel insurers also paid out £472 million across more than 500,000 claims. We’re working closely with the regulator to ensure good outcomes for customers and will engage with Which? to understand the details of its concerns.”
