The Financial Conduct Authority (FCA) has identified areas where life insurance providers must improve, particularly in claim settlement timelines and how they evaluate customer experiences. While insurers often deliver compassionate support to bereaved customers, the FCA’s review reveals there is still significant room for improvement in key areas.

Evidence of Good Practices and Challenges

The FCA’s multi-firm review highlighted positive examples of how insurers support claimants during emotionally challenging times. Some firms were commended for going beyond transactional interactions by offering tailored assistance and additional resources to help customers navigate the claims process.

However, the review also recognised the operational hurdles firms encounter, such as the need to gather adequate documentation to assess claims accurately. These challenges can slow down the process, impacting how quickly customers receive the financial support they need.

Timeliness of Claims Processing

Despite some good practices, the FCA emphasised that many insurers are falling short of meeting expectations regarding efficiency and customer service outcomes. Data from the review showed significant variations in claims processing times:

• Term insurance policies took between 53 and 122 days to finalise.
• Group life insurance claims averaged 36 days to process.
• Over-50 plans were completed in 20 days on average.
• Whole-of-life policies required around 53 days.

The review highlighted a lack of consistent measurement across firms, with few insurers systematically tracking these timelines. This inconsistency hampers the industry’s ability to assess and enhance its service levels.

Regulatory Expectations and Actions

To address these issues, the FCA plans to engage with the industry to collaboratively improve customer outcomes. The regulator will monitor changes made by insurers in response to these findings and take corrective action if sufficient progress is not demonstrated.

Matt Brewis, director of insurance at the FCA, underscored the importance of customer-centric practices, stating:

“The loss of a loved one can be intensely stressful, and we expect firms to offer the right support to help their customers during this difficult time. We expect all life insurers to act on our findings and avoid unnecessary delays with claims.”

Consumer Duty and Customer-Centric Approaches

The FCA’s concerns are especially relevant in light of the Consumer Duty introduced in July 2023. This regulatory framework mandates that firms place consumers at the centre of their operations and actively work to deliver positive outcomes. The Duty sets a clear expectation that life insurers must ensure their processes and systems are designed with customer well-being in mind.

Addressing Probate Delays

Probate-related delays are another factor contributing to prolonged claim settlements, with the average probate process taking around nine months. However, placing life insurance policies in trust can significantly expedite the release of funds. By avoiding probate, insurers can ensure that beneficiaries receive their payouts much faster, reducing stress and financial strain during an already difficult period.

A Path Forward

The FCA’s findings highlight the importance of balancing operational efficiency with compassionate customer service. While the challenges in claims processing are understandable, they must not come at the expense of timely support for bereaved families. By focusing on consistent measurement, quicker settlements, and proactive use of tools like trusts, the life insurance industry can align more closely with regulatory expectations and, most importantly, the needs of its customers.

Here at Golden Rock Solutions we source information so you get the best support, service & speedy delivery and obviously price for your families needs (that’s residential Mortgages, buy to let or commercial solutions) Also how you protect your mortgage after all you are in a contract and any one can be ill or pass away. Like above, the Mortgage still needs paying even in these events in a timely fashion. We can help with life insurance, Mortgage protection, Critical illness Protection and income protection and write these protections into Trust

Please share and get in contact for more information and to see if your Mortgage and protection is set up correctly for you and your home. Your home may be repossessed if you do not keep up with your repayments