Rebecca recently joined us in 2024 as a Senior Content Writer and has experience researching and creating multimedia content. With a keen interest in current and emerging industry affairs, Rebecca responds through a critical lens and, by promoting thought and discussion, aims to increase awareness of UKGI’s work.
Which? urge FCA to intervene as insurance claim rejections rise and consumer trust falls

Which? has urged the FCA to intervene and protect consumers after alleging 'flawed' sales processes have led to consumers overestimating the extent of their insurance coverage and failing to recognise its limits.
The comments by Which? follow its survey of 3,538 adults who'd purchased car, home, pet or travel insurance, and monitoring of a group of 24 home and travel insurance customers as they searched for suitable insurance products.
When asked about their expectations of coverage, Which? found respondents tended to overestimate their policies, lacked an understanding of the role of the regulator in maintaining standards of cover, and were unaware of common exclusions in home and travel insurance.
The consumer watchdog links this to recent increases in claim rejections, specifically home and travel insurance where rejection rates are highest, suggesting customers are only realising the true nature and extent of their coverage upon making a claim and having it declined.
The notion that insurance products are failing to deliver on the expectations of consumers, in turn leading to a rise in claims, appears to chime with the findings of the CII’s latest Public Trust index, which suggested a widening of the gap between consumers’ expectations of how insurers will treat them and their actual experience.
The Index reported consumer satisfaction with insurers had fallen to 84% in Q4 of 2024, down from 86% a year earlier, with a total of 14% reporting being extremely satisfied- the lowest reported level since the Index began in 2019.
Inflated Expectations of Policies & Exclusions
The expectations many surveyed respondents had of insurance products and the extent of their coverage were inflated or erroneous- as was their perception of the FCA’s role. For instance:
- 31% believed policies would cover them for ‘anything that wasn't their fault’. In fact, policies itemise a limited set of events which are covered, such as accidental damage, and exclude others, such as wear and tear.
- 64% of respondents believed most insurance products on the market offer 'similar levels of protection'. In reality, cover and product features vary significantly between insurers, with most also offering a range of cover and optional add-ons.
- 65% thought the FCA set minimum levels of cover. Whilst the FCA expects insurance firms to consider the needs of its target market when designing products, it does not oversee or control minimum levels of cover.
When asked about various hypothetical scenarios in which customers may turn to their insurer, many respondents also had unrealistic expectations about what was covered. For instance:
- 51% of respondents thought travel insurance policies would typically cover a connecting flight missed because of a delayed outgoing flight. However, it is common for connecting or returning flights not to be covered.
- 39% believed a typical home insurance policy would cover storm damage to a fence, and 34% thought they'd be covered against wet rot in floorboards. In reality, both are usually excluded.
Are sales processes to blame?
Highlighting that almost 3 in 10 claims on combined home insurance policies were declined in 2023, and approximately 2 in 10 travel insurance claimants unsatisfied, Which? suggests consumers only realise they have overestimated their cover upon contacting their insurer to make a claim, undermining trust and endangering the financial and emotional wellbeing of consumers.
Which? attributes this in part to complex and expediated sales processes for insurance and increasing use of price comparison websites to compare cover and prices among policies. According to Which? this has led to decreased scrutiny and understanding by customers of policy wording and details, whilst the complex questions posed by insurers risk customers becoming confused or providing inaccurate details, threatening claim validity later down the line.
Which? urged insurers, brokers and distributors to do more to ensure policy limits and exclusions are clearly flagged and that cover is likely to meet the expectations of customers.
Rocio Concha, Which? director of policy and advocacy, added:
“Our latest research shows how many of the problems people face with insurance can be traced back to a flawed sales process, where firms are failing to support customer understanding of complex terms and exclusions, which can sow the seeds for disaster.”
Concha called for the FCA to exercise its “the power and responsibility to step in and protect consumers” and “start taking tough enforcement action against insurers that are failing to meet their Consumer Duty obligations or comply with FCA insurance rules or wider consumer law.”
The value of brokers in aiding customer understanding
As the increased use of comparison websites or marketing in place of brokers has affected customer’s ability to understand policies, or discern the suitability of insurance products, the findings of both the Which? survey and CII Public Trust Index both highlight value of the interactive, personalised advice offered to consumers by brokers.
Brokers could therefore play a valuable role in ensuring customers fully understand which insurance products would best align with their expectations, meet their needs and the limits and extent of the cover. In turn, this would minimise the chance of claims being denied due to product unsuitability, a misunderstanding of exclusions and limits, or mistakes being made which lead to invalidations, protecting customers and preserving their trust in insurers.
Learn more
The Development Zone has a range of e-learning courses to equip brokers in understanding policy wording, advising customers and ensuring that products are suitable for their demands and needs- all whilst allowing users to fulfil their annual CPD requirements!
Useful courses include:
- Understanding Policy Documents
- Assessing Customer Needs (Multi-module Pathway)
- Communicating with Customers
- Customers and their Expectations
All courses can be access through the course catalogue.
If you are new to the Development Zone, get in touch with the team at devzone@ukgigroup.com to discuss how the platform can aid your firm in fulfilling regulatory CPD requirements whilst enhancing the learning and development of your team. Or request a free 14-day trial at https://mydevelopment.zone/free-trial to see for yourself!