Insurance: FAQs

This briefing answers some of the most common questions the Library receives about insurance services

How do I complain about an insurance provider?

Many complaints can be resolved by discussing the matter with the relevant insurer. If that doesn’t resolve the situation, the next step is to follow the company’s complaints procedure.

Firms regulated by the Financial Conduct Authority (FCA) have to run their complaints handling process according to specific rules. This means complainants should expect the insurer to send a prompt acknowledgement of a complaint, keep complainants informed about the progress of the complaint, and make a final decision on the matter within eight weeks.

If the company doesn’t reply within eight weeks or the reply isn’t satisfactory, customers may complain to the independent Financial Ombudsman Service (FOS).

In most cases a FOS case handler will first provide an assessment of a complaint and may recommend compensation.

Both sides have the right to reject the case handler’s recommendation and to ask for it to be reviewed. The case will then be passed to a FOS ombudsman who will consider the case again and issue a ‘final binding decision’.

If the complainant accepts the final decision, it becomes legally binding for both parties, meaning the company they complained about will have to take whatever action the FOS recommended.

The FOS also has a database of earlier cases and decisions which can be used to get an insight into its approach.

Can insurers discriminate based on age and disability?

Equalities legislation generally outlaws discrimination on the basis of specified characteristics, but there are some exceptions for insurance services.

In Great Britain, the Equality Act 2010 permits insurers to charge customers more if they can demonstrate that their age or disability (including health conditions) means that they are more likely to make a claim. They can also refuse to offer insurance to customers because of their age or disability. Such judgements have to be “relevant” and “reasonable”.

So, for instance:

• Motor vehicle insurers are allowed to charge younger drivers more on the basis of statistical evidence that they are much more likely to claim.
• Travel insurance providers may legally charge older customers more on the basis that older people are more likely to become ill during the course of the policy.
• Travel or health insurers may ask customers about relevant health conditions and disabilities. They may charge more if they can demonstrate with actuarial evidence that those conditions are more likely to lead to claims.
• Life assurance providers may take age and health conditions into account on the grounds that these are likely to help determine how long a customer will live. They may adjust premiums accordingly.

The law in Northern Ireland is slightly different but has a similar effect.

In Great Britain there is a specific exception made to allow age discrimination in the provision of financial service products. In Northern Ireland the law does not generally prohibit providers of goods, facilities and services from discriminating on the grounds of age.

As for disability, the Disability Discrimination Act 1995 allows service providers to charge disabled people more, if this reflects a greater cost in providing the service.

My insurer has rejected my claim because they say I didn’t give accurate information when taking out the policy. What can I do?

Insurers may reject claims if they find that the information provided to them was inaccurate. For example, if a home insurance policyholder did not tell their insurer that someone living at the property had a bankruptcy order, the insurer may decline claims made under the policy.

Customers must take reasonable care to ensure they do not make misrepresentations to their insurer when taking out a policy or renewing a policy under the Consumer Insurance (Disclosure and Representations) Act 2012. If they do not, insurers may be allowed to void policies and refuse false claims or alter the terms of a policy.

What is considered “reasonable care” is subject to various factors laid out in the legislation.

If a customer disagrees with their insurer, and feels they did take reasonable care, they can make a complaint to their insurer and escalate this to the Financial Ombudsman Service if necessary.

Mid-term changes

Sometimes, circumstances change in the middle of an insurance contract which could have a material impact on the insurer’s decision to offer insurance or what they charge.

For example, fitting an expensive soundsystem into a car might increase the risk it is stolen and so make the car more expensive to insure.

Insurance contracts may require policyholders to tell their insurer about specific changes of circumstance, or risk some claims against the policy being voided.

With the case of mid-term information disclosures, policyholders are not protected by the Consumer Insurance (Disclosure and Representations) Act 2012 and so insurers may be able to reject a claim even if the policyholder took “reasonable care” to inform them of changes in their circumstances.

However, policyholders can still complain in these instances and escalate their complaint to the Financial Ombudsman Service, if they feel they have been treated unfairly.

Other topics

The briefing paper also covers such issues as:

• How to complain about loss assessors and adjusters
• insurance arrangements for subsidence and flooding
• Why non-fault claims increase car insurance premiums

Please note that the information in this briefing paper is provided to Members of Parliament in support of their parliamentary duties. It is not intended to address the specific circumstances of any particular individual. It should not be relied upon as legal or professional advice, or as a substitute for it.