The FCA’s recent review into claims handling across the home and travel insurance sectors represents a welcome intervention into an area that is long overdue for scrutiny.
“While it saw some good practice in the home and travel sector, it also uncovered concerning evidence of poor claims handling practices…”
In many ways, the report highlights what numerous professionals—and more importantly, many Policyholders—have experienced first-hand for years: claims processes that are opaque, inconsistent, and often driven more by internal process than genuine customer care. The FCA’s findings begin to pull at the threads of an industry issue that, until now, has largely operated out of sight of public scrutiny.
Outsourced Services and the Illusion of Accountability
One of the FCA’s most striking criticisms relates to the use of third parties:
“Lack of oversight of outsourced services, resulting in poor customer outcomes, delays in settling claims and high complaint volumes.”
This cuts to the heart of a growing problem. When Insurers rely on outsourced claims management functions, the level of genuine accountability appears to dissipate. These outsourced functions, while often positioned as a means of improving efficiency, can create bottlenecks, misaligned incentives, and customer frustration when left without robust oversight.
In our own work supporting Policyholders, we frequently encounter situations where communication breaks down, reports are inconsistent or delayed, and Policyholders are left confused or worse, pressured into accepting inadequate settlements.
Cash Settlements – A Convenient Solution or a Missed Duty of Care?
The FCA’s concern around cash settlements also resonates deeply:
“Cash settlements being used without sufficient consideration of whether they are most suitable.”
Cash settlements may be expedient, but they are not always appropriate. Without a full understanding of a consumer’s ability to manage reinstatement works or access to alternative quotations, cash offers—particularly when they’re calculated based on a “limit of liability” or internal valuation—can leave Policyholders seriously under-compensated.
We’ve witnessed too many cases where a cash settlement is presented not as an option, but as a fait accompli. This undermines trust in the process and can lead to significantly poorer outcomes for the Insured.
The Missing Piece: The Policyholder’s Voice
While the review is a positive step, it still falls short in one key area: it doesn’t fully capture the lived experience of the Policyholder. Behind every complaint, delay, or dispute is a person or family navigating an already stressful situation—often with little transparency, limited support, and a sense of power imbalance when faced with large corporate Insurers.
If the industry is serious about restoring public trust, it must begin not just by tightening controls and reviewing internal performance, but by listening to the voices of those it serves.
Conclusion: A Welcome Start, but More to Do – Tom Butcher, Director at PCA:
This review is an important milestone. It validates many of the frustrations long felt by consumers and their representatives, and it signals that regulators are paying attention.
But genuine reform will require more than acknowledgements. It will require Insurers to prioritise transparency, fairness, and genuine oversight—especially where they delegate critical parts of the claims journey to others. It will also require continued engagement with Policyholders, Loss Assessors, and independent professionals to ensure the claims process delivers on its promise.
Tom Butcher – Director of Property Claim Assist
Read the full FCA press release here:
If you’d like to discuss how we support clients through complex claims or share your experience with recent handling practices, please get in touch with Property Claim Assist.
