Unfortunately, industry statistics show home insurers are among the most likely to reject claims and to receive complaints from claimants. They also suggest the situation is getting worse.
Here, we look at the insurers with some of the worst records, as reported by the regulator, and hear from industry experts to explore what's behind the worrying figures.
Claims rejections on the rise
The FCA's data also suggests that the situation has worsened. At least half of home insurance firms in both years' data rejected more claims on combined policies in 2023 than they did in 2022, and more claimants are making complaints.
Lloyds Insurance Group had an acceptance rate of just 30-35% for buildings-only policies, meaning two in three customers received nothing following their claim. Some 15-20% of claimants complained.
Meanwhile, esure and Rentokil both accepted between 40-45% of claims made on their buildings-only policies. Some 10-15% of esure claimants and 0-5% of Rentokil claimants made a complaint.
The AA and EUI had claims acceptance rates of 50-55% for their buildings only products. Concerningly, 25-30% of all claims received by the AA resulted in a complaint. For EUI, this figure was 15-20%.
Urban Jungle accepted 50-55% of claims made on its combined buildings and contents policies. Some 10-15% of claimants complained.
'More complaints than we would have liked'
The AA acknowledged that 'the level of complaints received during 2023 was higher than we would have liked, in part a reflection on increased service due to weather events.'
It added: 'We have made significant improvements to our services and have seen the level of complaints come down while our customer feedback improves.'
EUI told us: 'We never like to hear that a customer is unhappy with the service they received but we are rigorous in recording any dissatisfaction by customers as complaints. We are always striving to improve our products and service, and this helps to identify ways we can do this.'
Find out more:'After two years, I'm still fighting for a fair settlement'
Lloyds customer, Stephen Adshead, was dismayed by his experience after his house suffered considerable damage from a leak. The leak was so severe inside his house that Stephen and his children had to enter a bathroom with an umbrella.
Repair work has cost around £20,000, but Stephen says the sums he has been offered to settle the claim would leave him seriously out of pocket.
Despite working as a lawyer specialising in litigation and insurance, Stephen said he has struggled with the claims process and is still fighting for a fair settlement two years on.
Commenting on Mr Adshead's case, a spokesperson for Lloyds Bank Home Insurance said it's unable to discuss details of his case as it's part of ongoing legal proceedings.
What's behind the rise in rejected claims?
Some insurers cite 'external factors' for the rise in rejected claims. For example, extreme weather in 2022 - from storms to heatwaves - put a strain on claims departments.
Steve Wright, a claims director at broker Russell Scanlan, told us he wasn't surprised by rises in complaints. He said 'insurers have been noticeably slower in resolving claims for at least the last year.'
He speculated that Covid had played a part, as during the pandemic 'insurers and their suppliers reduced staff and have since found it hard to fill those roles or have tried to keep costs down by not increasing headcount. This has led to a lack of resources, backlogs and delays.'
Find out more:Insurers dispute the data
A number of insurers—including the AA, esure, EUI, Lloyds, and Urban Jungle—questioned the reliability of the FCA's figures when comparing different providers.
Many said firms differ in whether they record and report customer 'enquiries' - where customers contact the insurer to find out if they have cover for a prospective claim and are told 'no' - as 'rejected claims'. Insurers that don't record these conversations as 'claims' would appear to reject fewer than those that do.
A spokesperson for Lloyds Bank insurance said: 'Not all insurance providers record claims data in the same way so these figures shouldn't be compared like for like. Our customers can rest assured that our policy cover is good relative to the market and our payout ratio is in line with the industry average.'
According to the FCA's guidance to firms on reporting claims data, all firms should include queries of this nature as rejected claims.
The trouble with streamlined sales
Claims problems often stem from customers simply having bought inadequate cover. A loss adjuster we spoke with felt that 'lots of people don't understand what they're getting for their needs, and they think they're getting a bargain.'
A number of insurers said that the most common reasons for turning down claims was where there was no cover in the policy - for example where the customer hadn't bought optional features such as accidental damage cover or personal possessions add-ons.
Johnny Timpson, an independent consultant and insurance industry expert, feels there are a 'raft of products' that are difficult for consumers to compare and that 'tend to have a lot of exclusions that aren't particularly obvious when you buy the product'. He thinks there 'needs to be some work done to simplify products and standardise risks'.
It's not only customers leaning on guesswork. Michael Gregson, director of private clients at broker Blackford, thinks the way insurance is sold online often isn't thorough enough to give insurers the information they need to fully understand those they're insuring. This leaves them relying on sweeping generalisations about customers and their homes based on data such as postcodes.
Find out more:Sign our petition to end the insurance rip-off
Rocio Concha, Which? Director of Policy and Advocacy (pictured above), said: 'When home insurance customers take out a policy, they don't expect to have to claim - let alone face a protracted ordeal with their insurer just to get justice.
'That customers who've been through hellish ordeals, such as a fire in their house, are still battling with their insurers long after the event is extremely concerning.
'The FCA's requirements on insurers have been clear for some time: firms must deliver good outcomes for customers, especially those in vulnerable circumstances. Our research suggests that some firms aren't following these requirements - and the regulator shouldn't hesitate to take action against those falling short.'
An FCA spokesperson told us: 'We're aware insurance complaints are rising, and we've taken direct action with firms where we've seen poor customer service.
'Complaints handling is a priority for us. We've told firms what we expect, and we're monitoring the issue across the sector to make sure claims are being dealt with promptly and fairly.'
Find out more:Additional reporting by Ross Crapnell. Read the full investigation in the December 2024 issue of .Which? Limited is registered in England and Wales to 2 Marylebone Road, London NW1 4DF, company number 00677665 and is an Introducer Appointed Representative (FRN 610689) of the following:
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source https://www.which.co.uk/news/article/home-insurance-claims-rejections-on-the-rise-whats-going-wrong-aL3za5B9y1y8