Claims handling lessons learned from business interruption insurance

The FCA recently published a review of business interruption insurance claims handling. This review highlighted lessons to be learnt and applied to achieve good customer outcomes in the future. These include some valuable lessons for any claims function ahead of the Consumer Duty implementation.

What does good look like?

• Communication is proactive and tailored to the type of customer, as set out in ICOBS 6.1.6BR
• There is a range of customer communication channels available, such as telephone and web access
• Information requests are tailored (if possible) to the size and complexity of the business and are not overly burdensome and excessive
• Vulnerable customers are correctly identified and provided with the appropriate level of care, in line with FG21/1 
• There is appropriate oversight of the claims journey from Senior Management
• Conduct focused management information provides oversight of customer outcomes, such as the end-to-end customer claims experience, to identify potential harm in the claim journey
• Oversight and monitoring of delegated partners includes conduct focused metrics (focusing on customer outcomes)
• Policy wordings are easily accessible to avoid any delays in claims handling
• Quality assurance considers the entire claims experience and does not focus on a single area, such as settlement amount paid

The FCA also outlined the importance of a firm’s claims service to ensure that claims are paid in a prompt and fair manner.  This is especially important in light of inflation and cost of living pressures, which are likely to see more consumers in financial difficulty.

Firms need to remain alert to changing situations for their customers, with customers likely to present a wide range of vulnerable circumstances, including non-financial knock-on effects of the rising cost of living.

As a result of these findings and the impending New Consumer Duty the FCA is encouraging firms to undertake a review of their claims processes and procedures. This will include any outsourcing arrangements to make sure they remain effective in mitigating customer harm.