The Insurance & Financial Services Ombudsman (IFSO) scheme has released its 2018-2019 annual report, and has revealed a small increase in complaints (up to 322 from 320) and a more significant increase in complaint enquiries (up to 3,805 from 3,357) from the previous year.
Seventy per cent (70%) of total complaints were in relation to general insurance, and 25% were about health, life and disability insurance. Twelve (12) complaints were about credit contracts, and financial advisers saw only three complaints for the full year. The most common complaint issues were policy exclusions, scope of cover, pre-existing conditions and gradual damage.
IFSO Karen Stevens says the rise in complaints is not a bad thing – it means consumers are more aware of their rights, and that insurers can get better feedback on how to improve their services. However, she says the root cause of complaints is too often a customer’s misunderstanding around the product they hold – and this needs to be tackled from both ends.
“Unfortunately, this tendency for misunderstanding hasn’t changed over a long period of time,” Stevens told Insurance Business.
“Consumers can end up with products that aren’t fit for purpose, and there is often a mismatch between what they think they’re paying for and the service they’re actually getting. As a result, there are a lot of cases where we just can’t give the consumer the outcome they want.”
“Insurers have been moving more towards plain English policies, but there has been a lot said recently around them needing to do better in that regard,” she explained. “But the question is – if the policies are in plain English, are consumers going to read them? There is a certain responsibility on them to read and understand what those documents say, so that they can make an informed decision about whether or not it’s the right product for them.”
Ultimately, Stevens says that the number of claims coming to IFSO is a small percentage of the total number made, and learning from the ones that end up resolved through IFSO is a good step towards the better conduct and culture that the industry is aiming for. She says the journey towards financial literacy needs to be taken at a much earlier stage, and taken from both ends – both the insurer, and the consumer.
“It’s important for us to not only deal with the complaints, but also to prevent them arising by feeding that information back to the insurers and helping them to improve,” Stevens said.
“Insurance provides a really great service for people when it pays out, but when there’s a misunderstanding of what the cover is about or what it includes, that’s when consumers become really unhappy. We’re also focused on putting the message out to consumers on how they can avoid those pitfalls.”