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FCA thematic review – SME claims handling

22 May 2015

The FCA has published a thematic review into the handling of insurance claims for Small and Medium sized Enterprises. The FCA’s findings do not make happy reading for the SME insurance market.

The FCA conducted interviews and audits of insurers, intermediaries (including MGAs) and loss assessors. It has concluded that:

  1. SMEs perception is that the quality of claims handling is poor
  2. there is often a lack of clarity over who and what is driving claims outcomes
  3. there are poor channels of communication between different parties handling a claim and SMEs
  4. ‘sums insured’ are often inadequate.

The most significant concern from the FCA’s perspective is that it found SMEs were frequently not treated fairly. The regulator’s message is that SME insurers need to more closely follow the approach taken on consumer lines.

The FCA expects all those involved with SME business to carefully consider the report and will be following up on it. Therefore insurers and intermediaries should reconsider their business processes in the light of FCA’s findings and implement any necessary changes as soon as possible. Priority should be given to ensuring quality and consistency of claims handling approach, the adoption of clearer communication channels as well as processes which demonstrate oversight of third parties involved in the claims process and ownership for claims outcomes.

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Jonathan Newbold

Jonathan Newbold

Partner and Head of Financial Services & Insurance

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