New Which? research suggests the impact of the coronavirus has caused widespread frustration with insurance claims handling – with some customers experiencing weeks without information and waiting hours to be connected on the phone.
The consumer champion asked 95 Which? members who have made insurance claims over the last nine months to keep a diary tracking their experience during the process – with more than four in 10 of all the claims tracked directly linked to COVID-19.
These diaries – logging issues ranging from cancelled holidays to house repairs – exposed recurring problems with the claims process after many faced communications limbo, inflexible procedures and companies shifting the blame – with around a third of diarists reflecting negatively on insurers’ handling of claims.
Eighty of the 95 journals began well after the beginning of lockdown and more than half of these were about travel insurance claims. Of the dozens of diarists, only nine reported having their claims settled in the time they kept their diaries – a process which took between one day and 19 weeks.
Several diarists found themselves stuck between their insurer and other firms trying to shift liability – most typically airlines, tour operators and banks.
One man was left £226 out of pocket for five months while an airline, bank and insurer squabbled over liability for his loss after his trip to Malaysia and Japan was cancelled.
He told Which? that while he finds the process somewhat of a “farce”, he’s been generally impressed with how supportive the insurer has been – although he found its claims process “tedious”.
Recent Which? research revealed that many airlines and tour operators have broken the law by not issuing refunds for cancelled trips. It analysed 12,000 refund complaints worth a combined £5.6 million, with the total time spent by customers pursuing the claims totalling 52,000 hours.
Collectively, the diarists logged 9.5 hours simply waiting to be connected to insurers on the phone, with the longest waiting time for a single call lasting 95 minutes. One member endured more than four hours of hold music across five calls logged in his journal.
Claimants also discovered that lockdown conditions placed severe strain on car and home insurers too.
Another man faced months without an upstairs bathroom, damaged septic tank and sightings of trespassers when lockdown stopped repair work after a car crashed into his house.
The consumer champion has since contacted the insurer, which confirmed the work is now back on track, and has offered the diarist £300 compensation.
As well as delays, other customers reported very poor levels of customer service. For instance, one diarist spoke with nine staff at a travel insurer – over one 70-minute call – just to get a claims form.
A car insurance claim was dismissed because the diarist hadn’t notified the insurer before issuing repairs or used its online claims portal, while several others who were able to make claims discovered weeks later that updates and information requests were issued to them on the insurers’ websites, not by email or phone.
Which? is advising claimants to contact their insurer directly for advice before claiming, to keep detailed records of events and interactions with companies, challenge the terms and conditions of policies, and not to give up in their pursuit of a result.
The Financial Conduct Authority has issued guidance to financial firms – such as travel insurers and card providers – on making it simpler for consumers to recover lost costs after cancelled travel.
Which? believes there also needs to be greater cooperation between the travel sector and financial services and has called for the FCA to consider its role in facilitating and promoting this.
This move would stop customers from having to keep returning to insurers with advice from firms in the travel sector, preventing lengthy, confusing and stressful processes.
Jenny Ross, Which? Money editor, said:
“While the coronavirus outbreak has had a massive impact on the insurance industry, customers should not have to suffer such excessively long waits for insurers to respond to their claims, let alone resolve them.
“We expect the industry to step up its game to ensure the process is as efficient as possible for those making a claim.
“If you are struggling to get your insurer to act on a claim don’t give up. Whether it’s battling through extended hold times, submitting and resubmitting documents, or disputing how your claim has been assessed – for many people, persistence has paid off.”
Stephen Cohen had to cut short his trip to Malaysia and Japan in March due to government advice and has since faced an agonisingly slow process pursuing costs for his unused return flight.
On the advice of his insurer AXA, he asked his bank to use chargeback to recover the £226 that he was owed from the airline. But when Which? spoke to him in July, the airline – which wouldn’t provide him a cash refund – had also not been responding to the bank.
The airline had been given until late July to contest the chargeback. The bank would otherwise recover Stephen’s money for him. If the airline disputed it, AXA would pay him the amount. Until the airline’s deadline to do so passed however, he was left out of pocket as he waited.
Stephen told Which? that while he finds the process somewhat of a “farce”, he’s been generally impressed with how supportive the insurer has been – although he found its claims process “tedious”.
Stephen Kramer, whose diary spanned 149 days, claimed with LV after a car crashed into his home in January, but several delays meant that repairs hadn’t been completed by late March, when lockdown brought things to a halt.
In April, he’d found damp coming through his bathroom wall, caused by the crash. By late May, while waiting to hear back from his insurer, he was having to make some emergency repairs himself.
When Which? contacted him in mid-July, he was still waiting on updates – while without use of an upstairs bathroom, a damaged septic tank, and sightings of trespassers trying to enter through his damaged garden wall.
The consumer champion has since contacted LV, which confirmed the work is now back on track, and has offered Mr Kramer £300 compensation.
Right of replies
All the diarists’ insurers that Which? contacted cited challenges posed by coronavirus. AXA apologised for not processing all claims smoothly, while LV also said it was sorry for Mr Kramer’s experience of delays.
AXA added it experienced a surge in travel claims 10 times bigger than the travel insurance industry’s last ‘benchmark’ event, the 2010 Icelandic ash cloud. “We were all hands on deck. To simplify things for customers, we adopted a pragmatic approach to claims validation. We’re constantly adapting our strategy to protect customers.”
With Stephen Kramer’s claim, LV has confirmed the work is now back on track, and has offered him £300 compensation.
Notes to editors
To understand their experiences with insurers, Which? asked its members making claims to keep diaries tracking their experiences. Over nine months, it collected and analysed 95 claims diaries.
Which?’s 10 point plan for government to support the travel industry through the coronavirus outbreak: www.which.co.uk/policy/travel/5747/trustintravel