Which? has filed a super-complaint against the UK insurance sector, alleging that the process of making a claim can be more distressing than the original incident for many customers.
The consumer group has targeted the home and travel insurance markets, describing them as “broken” and calling for urgent action from both the industry and the Financial Conduct Authority (FCA).
The super-complaint, a rarely used tool that allows consumer bodies to seek regulatory intervention on behalf of customers, highlights a range of issues. Which? cited examples such as an insurer refusing to pay out for a cancelled holiday because the trip had technically started before a flight was turned back after two hours.
Rocio Concha, director of policy at Which?, said, “We have heard heartbreaking stories from people who have found the experience of dealing with an insurance company worse than the distressing life events that led to their claim.” She described the super-complaint as “a major intervention,” used only when a significant number of consumers are believed to be harmed by sector-wide practices.
Meanwhile, among the segments, motor insurance remains the most complained-about insurance product in the UK, with nearly 3,600 complaints to the Financial Ombudsman Service (FOS) in the final quarter of 2024. Buildings and travel insurance follow closely, together accounting for a significant portion of general insurance complaints.
Over the past five years, the FOS has received nearly 190,000 insurance complaints, with motor insurance making up almost one-third of the total, and buildings and travel insurance also ranking high.
High upheld rates for complaints are seen in motor, pet, and buildings insurance, each at 41%, which is above the industry average. These figures have raised concerns about insurer performance and have contributed to calls for increased regulatory scrutiny.
According to Which?, the complaint is based on three main concerns. The first involves the handling of claims, with many insurers outsourcing this process to specialists. The second relates to sales practices, which the group argues are often inappropriate and leave customers confused about what is actually covered. The third is a criticism of the FCA, which Which? claims has failed to provide adequate protection for consumers.
Industry data shows that while 99% of car insurance claims are upheld, the acceptance rate drops to 63% for buildings insurance and 80% for travel insurance. Which? estimates that around 30 million people in the UK have buildings and contents insurance, with a similar number purchasing travel cover each year.
Which? says that the super-complaint is supported by analysis of individual cases, surveys, and additional research, and the FCA is required by law to respond within 90 days.
The Association of British Insurers (ABI) responded by stating that providers work hard to ensure customers understand their policies and that claims are handled efficiently.
“In the first half of this year alone, insurers have paid out over £1.7 billion for more than 300,000 home insurance claims. Last year, travel insurers also paid out £472m across more than 500,000 claims,” an ABI spokeswoman said. The ABI added that it is working closely with the FCA to ensure good outcomes for customers and will engage with Which? to address its concerns.
James Daley, managing director of Fairer Finance, welcomed the super-complaint and called for the FCA to revisit its approach to the sector.
“Insurance provides essential protection for millions of consumers, but the market is not currently working,” Daley said.
He noted that while comparison sites have increased price competition, they have also led to products that may not meet customer needs and inconsistent claims handling. Daley also said that a trusted insurance industry is vital for financial stability and economic growth, and called for new rules and stricter enforcement of consumer protection standards.
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