The below information was recently shared with the Treasury Select Committee and is useful in giving an insight into current and future areas of interest in claims settlements and comes of course in the context of the recent introduction of the Consumer Duty requirements.
The FCA's expectation of firms in this regard is that:
- Firms must have adequate controls capable of handling insurance claims promptly and fairly, irrespective of whether they are outsourced to third parties. The Consumer Duty requires that firms implement sufficient processes to prevent foreseeable harm and that products meet the sufficient needs of customers.
- Firms are prohibited from delegating any part of their regulatory responsibility, especially to third parties. Where third parties are engaged to fulfil others claims, it remains the firm's responsibility to ensure that claims are adequately handled. The firm should maintain regular communication with third parties, provide clear instructions and establish quality auditing controls.
As part of the FCA's wider and ongoing supervisory work, the FCA:
- Engages with firms, including small and medium sized firms, to understand their settlement processes, and their internal procedure for ensuring consistency in quality across all claims irrespective of whether it is outsource, in order to prevent such customers from being at a disadvantage.
- Monitors claim handling processes and claim outcomes.
- Analyses data provided from the Financial Ombudsman Service and engages in discussions surrounding emerging issues and trends. As a resukt of this work, the FCA have identified specific issues relating to motor total loss claims, where cars were judges total write offs.
If you have any queries in relation to the above, please do not hesitate to get in touch on the contact details below. We would be happy to expand/discuss any of these areas of concern further with you.
