Building insurance complaints soar to 10-year high, according to FOS

FOS reveals a "concerning" rise in the number of complaints about home and business building insurance, as figures reach a 10-year high.

Data released on 29 August revealed homeowners and businesses brought 2,001 buildings insurance complaints to the FOS (Financial Ombudsman Service) in the first quarter of this financial year- a 13% rise from a year earlier. Buildings insurance was also found to be the second most complained about insurance product between April and June 2024/25.

The top three reasons for complaints being brought to the FOS in the last financial quarter were claim decline (41%), claim delay (23%) and claim value (8%).

The FOS added that cases were related to wider issues, such as an increase in ‘complex and expensive’ flood and storm damage, insurers struggling to source contractors or materials- along with substantial cost rises for both of these- and the limited availability of alternative accommodation for homeowners.

Sean Hamilton, Ombudsman Director in Insurance at the Financial Ombudsman Service commented that, whilst “[b]uilding insurance complaints have been steadily on the rise for some time […] it is concerning to see this significant change in the number of unhappy consumers […] in just a three-month period.”

He added that the FOS “encourage the [insurance] sector to take on board this insight and the reasons for which we are seeing cases, and to improve communications, transparency and timeliness.”

Notably, the data also showed that as the number of third-party agents involved in a claim journey increased, so did the occurrence of issues such as poor communication, delays, and consumer dissatisfaction.

Overall, the majority (80%) of complaints involved third-party agents- 75% of which were upheld- according to a sample of final decisions examined by the Ombudsman. Meanwhile, the overall uphold rate for complaints regarding claim delays in building insurance is already high at 57%.

Similarly, a July 2024 report by Which? that found that the use of third parties to deal with claims exacerbated poor service, with claims involving third parties nearly twice as likely to have problems arise at 60% than those without at 34%.

Sean Hamilton added:

The greater the number of parties involved in a claim, the more challenging it becomes for a consumer to receive information promptly.

We’ve heard from consumers who find themselves locked in a confusing chain of communication with no one party taking responsibility, and significant delays in settlement.

Firms need to ensure they’re meeting their regulatory obligations by clearly communicating with policyholders, engaging throughout the process and settling claims without unnecessary delays.”

Along with the increase in building insurance complaints, the FOS has reported that travel insurance complaints jumped by nearly a fifth (19%) annually in 2023/24. The FOS recorded 4,466 complaints in 2023/24- the highest annual total since the surge due to the unprecedented disruption during the coronavirus pandemic.

The recently released complaint data and high complaint uphold rate from the FOS indicates significant, consistent issues with the way claims are handled in the insurance sector. Firms should therefore review their claims handling process to ensure communication with policyholders is sufficient and clear throughout the process, and that claims are settled in a timely manner.

Learn more

Our e-learning platform, the Development Zone, contains courses to help teams to assess and build knowledge on key areas- all whilst fulfilling CPD requirements. Relevant courses include:

• Claims- Duties to a Client
• Claims Handling (Pathway)

If you are not a Development Zone user, get in touch with the team at devzone@ukgigroup.com to discuss our services and access a 14-day free trial to view the system and it's features for yourself- no commitment, no cost.