Which?, a UK-based consumer champion that helps consumers make informed choices of the products and services they purchase, has recently submitted a super complaint to the FCA to address failings in the insurance sector, particularly travel and home insurance.
This decision has arisen after a year of active campaigning with little to no action taken by both targeted insurance companies or the FCA yet as reported by Which?.
While any customer can submit a complaint to the financial or insurance company they’ve had a bad experience with, a super complaint is exceptional and can only be submitted by a legally authorised consumer body.
This type of complaint takes place on behalf of a larger number of customers when the consumer body thinks that they’re being harmed by poor and careless market practices.
Over the past year, Which? has investigated the insurance market through in-depth research into claims handling, policy terms, complaints, and customer expectations. The findings reveal widespread issues in how policies are sold, explained, and managed, with many home and travel insurance customers reporting poor experiences when making claims.
Rejected claims can cause severe financial and emotional strain, with many customers telling Which? they’ve faced confusing policies and poor claims handling.
The firm has shared examples of situations where customers have had their travel and building’s insurance claims refused for unfair reasons and is aiming to make its voice for all customers heard and acted upon.
These issues are well known to the FCA, which has repeatedly highlighted poor standards across the insurance industry. In recent reports, the regulator noted continued inadequate service, with too many customers denied fair treatment, particularly in home and travel insurance, where storm damage claims, cash settlements, and weak insurer oversight remain key concerns.
It’s clear that the introduction of Fair Value Assessments and Consumer Duty alone aren’t hitting the mark and that claims payouts’ fairness must be given equal or even more weight as that’s where firms can make a positive difference.
On top of its recent super complaint, Which? is also urging consumers to be cautious about cash settlements from home insurers, warning they may prioritise insurers’ cost savings over customers’ best interests.
An FCA report raised similar concerns, and Which?’s survey found 38% of claimants were offered cash instead of fair repairs or replacements. While cash payouts can speed up claims, they risk leaving customers out of pocket if repair costs exceed the settlement, which usually fluctuates even if the repairs have already started.
Which? also found widespread confusion over accidental damage cover. Although 19% of recent home insurance claims involved accidental damage, only 30% of buildings and 25% of contents policies include it as standard, with most offering it only as an add-on.
Its survey of over 4000 insurance buyers showed 31% of customers wrongly believe their insurance covers anything not their fault, and 64% think most policies offer similar protection.
The FCA will have to do much more than just acknowledging these issues, but put together a more comprehensive and clearer plan to address claim acceptance and wider insurance issues that impact customers.
Below are the three areas Which? has raised in its complaint and urges the watchdog to address:
- The FCA should urgently act against home and travel insurers failing to meet legal standards, using enforcement where needed.
- The FCA should conduct a market study to identify the causes of poor outcomes for home and travel insurance customers.
- The FCA and government should jointly review existing consumer protections to ensure they are effective in practice.
Following this complaint, the FCA has 90 days to respond and decide on the next steps; whether that’s taking appropriate action against insurance firms, carrying its own investigations or decide that this matter doesn’t demand further action.
As long as customers are being affected and treated unfairly by insurers , the FCA’s final decision should be one of taking responsibility, rectifying or introducing new tougher rules.
