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Financial Services Ombudsman reports on insurance complaints trends in 2013

AUTHOR(S): Sharon Daly
PRACTICE AREA GROUP: Commercial Litigation and Dispute Resolution, Insurance and Reinsurance
DATE: 08.04.2014

Fifty percent of complaints made to the Financial Services Ombudsman (FSO) in 2013 related to insurance, but only 5% of insurance-related complaints were upheld.

The FSO, William Prasifka, recently published his bi-annual review on trends in respect of complaints against financial service providers in the investment, banking and insurance sectors in Ireland between July 1 2013 and December 31 2013.

A total of 3,835 insurance-related complaints were received in 2013 (compared to 4,058 complaints in 2012), comprising 50% of all complaints. However, overall only 5% of insurance-related complaints were upheld. In the first half of 2013, only 6% of insurance-related complaints made were upheld (15% were partly upheld and 79% were not upheld). In the second half of 2013, only 4% of insurance-related complaints were upheld (17% of complaints were partly upheld and 79% of complaints were not upheld). The FSO awarded compensation totalling €269,132 in respect of insurance-related complaints.

For the first time since 2007, there has been a significant decrease in the number of complaints made, although there has been an increase in the number of complaints requiring formal investigation. The FSO reported that overall insurance complaints decreased by 34% in the second half of 2013. The FSO principally attributes the reduction in complaints to a change in procedures, and in particular the requirement that a complainant provide evidence that he or she has already communicated the substance of the complaint to the relevant financial service provider before making a complaint to the FSO.

The FSO has also attributed the reduction in claims to new reporting powers introduced on September 1 2013, which empower the FSO to name and report on the complaints records of individual financial service providers in the insurance, banking and investment sectors. Individual financial service providers, including a number in the insurance sector, against which three or more findings had been found by the FSO to be substantiated or partially substantiated (largely relating to payment protection insurance (PPI) where financial service providers in the insurance sector are concerned), have been named in the bi-annual review for the first time.

The sale of PPI made up 45% of all insurance-related complaints made to the FSO in 2013, making PPI the subject of significantly more complaints than any other type of insurance product and one of two products which were subject of the most complaints to the FSO across all sectors. A total of 1,736 complaints were made in respect of PPI. Life assurance was the subject of 11% of complaints, making it the second most complained-about insurance product.

Mis-selling was the issue most complained about in the insurance sector, with 49% of all complaints. Twenty-four percent of complaints related to repudiation of claims or settlement amounts, while 8% related to claims handling and 6% related to maladministration. Four percent of complaints related to the renewal, lapse or cancellation of policies and only 3% related to customer care.

During the second half of 2013, the two products which were the subject of the most complaints to the FSO were mortgages and PPI. The FSO's bi-annual review consequently includes a number of case studies of complaints received during the second half of 2013 in relation to PPI, to highlight the principal issues facing the FSO and to provide information on how findings are determined.

While the FSO has welcomed the overall reduction in the number of complaints, he has highlighted that the sale of PPI continues to be one of two issues which remain a concern. The FSO's annual report for 2013 is due to be published in 2014.

This article first appeared in the International Law Office Insurance and Reinsurance newsletter, 8 April 2014

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