A Financial Conduct Authority (FCA) review found evidence that some insurance firms had offered customers payouts worth less than their written-off or stolen vehicle – meaning some people could be owed money from an old claim.
Millions of drivers could be due compensation payouts after being underpaid by their car insurance provider.
A review by the Financial Conduct Authority (FCA) found evidence that some insurance firms had offered customers payouts worth less than their written-off or stolen vehicle. This means some people could be owed money from an old claim.
If a car is stolen or written off, then a driver can claim on their car insurance and the payout they should get should be equivalent to the amount their car should have been worth at that time. The findings come despite the FCA’s previous warnings that insurers must not undervalue cars or other insured items when settling claims.
The FCA’s review looked at the 12 biggest car insurers, which it said made up around 70% of the total market. Although it did not name the firms in question. In its findings, the FCA said whilst it did not examine individual cases, the “low average settlement figures” indicated that some customers’ claims may have been “handled unfairly”.
The FCA looked further into how insurers came to their final settlement offer and found several issues with the process. One example the FCA found evidence of was insurers deducting money off a payout for “wear and tear”, even though this should already have been reflected in the fair market value for a vehicle of that age.
The regulator also found that insurers were providing initial offers below the vehicle’s estimated market value and would only expect to increase it if the customer challenged it. This meant customers who agreed to the initial offer weren’t not getting the full amount they were entitled to. The FCA noted that this was in breach of regulatory requirements.
It also found some firms were attempting to dissuade drivers from challenging their valuation, for example by implying the Financial Ombudsman Service (FOS) wouldn’t offer them anything different. The review explained: “If the firm says its vehicle valuation approach reflects the FOS’s approach, there is a risk that customers may believe there is no prospect of a valuation increase even if the FOS subsequently assesses their case.”
The financial regulator said it was now “engaging” with the firms included in its review to ensure they make improvements to address its findings. The FCA advised customers who believe they could be owed compensation for a previous claim to make a complaint to their insurer and then to the Financial Ombudsman Service (FOS) if their complaint is not resolved.
Sheldon Mills, Executive Director, Consumers and Competition at the FCA said: “Having your vehicle written off or stolen can be intensely stressful and we expect firms to offer the right support to help their customers. We expect all motor insurers to take note of our findings and we are engaging directly with those that have issues that need to be addressed.’
All insurers must have a formal complaints process and need to provide information on how customers can issue one. This information should be explained on the insurer’s website. You can also approach them and ask them to send their complaints procedures to you.
You should provide as much evidence as you can in your complaint and once you have sent it off, the firm must respond within eight weeks. If you don’t get a response within this timeframe or are not happy with the one you get, you can take your complaint to the Financial Ombudsman for free. You do not need to use a claims management company to complain.
