Much like insurance, the FOS is a tool that you ideally don’t want to have to use – but, much like insurance, you’re glad it’s there when you need it.
Established in 2000 and given statutory powers (i.e. legal jurisdiction recognised by government) in 2001, the primary role of the FOS is to help settle disputes between consumers and UK-based financial service institutions, from banks to insurance companies.
Of course, in an ideal world, all relations between businesses and their customers would go smoothly. But sometimes, whether because of intransigence or ignorance – or less than professional business practices – lines of communication break down. In such cases, the presence of a neutral intermediary with legally binding powers is extremely useful.
“The insurance industry is committed to supporting customers and paying out all valid claims as quickly and efficiently as possible,” said a spokesperson for the Association of British Insurers (ABI). “However, where any complaints arise, insurers will always aim to deal with them swiftly, and work with the FOS to understand where learnings can be made.”
The ABI stressed the importance of clear communication at all points in the relationship between insurer and policyholder. After all, how many complaints could be avoided entirely if customers always knew exactly what they were and weren’t covered for? All too often, this ignorance comes down to consumers neglecting to read policies properly, but it’s not beyond the realms of possibility for wording to be at fault. Many UK adults have below-average literacy and numeracy skills, and the ABI points to initiatives such as Plain Numbers – which aims to help customers improve comprehension and firms to improve communication – as examples of how information can be shared in an accessible and consistent way.
Nip it in the bud
“Regrettably, there will always be disgruntled consumers who have had claims declined,” Anthony Kaye, Chairman of the Association of Travel Insurance Intermediaries (ATII), told ITIJ. “It’s usually due to a pre-existing medical condition not being included under the terms of the policy, as a result of a customer inadvertently omitting the condition when completing an online quote, or not declaring this to the operations team when purchasing. While a consumer may submit a complaint to the insurer, broker or intermediary in relation to a declined claim, if it is clear that the decline is correct, the customer then has the right to submit a formal complaint to the FOS.”
For insurers looking to settle disputes before FOS intervention becomes necessary, Kaye urged them to ensure robust training programmes are in place, so that all sales staff are qualified, competent and compliant at all times – ‘with particular onus on the complaints procedure detailed in the consumer’s policy documentation’. All websites and published literature, meanwhile, should ‘mirror the terms of the policy wording, with no ambiguous marketing statements’.
Regrettably, there will always be disgruntled consumers who have had their claims declined
“The complaints departments should also deal with all queries received without delay,” added Kaye, “I.e. responding in a timely manner. If further information is required, obtain this immediately, or if it is clear that this will be a decline, notify the customer immediately.”
An FOS spokesperson stressed the importance of staff knowing their policies inside and out. “Make sure team members fully understand any changes and updates to policy terms,” the spokesperson said. “Also, listen carefully to what customers tell them.” Should a complaint arise, ‘take a step back and look at the situation holistically’.
It’s often prudent to think about the sales journey from a consumer perspective, the FOS spokesperson continued. For instance, were clear questions asked about a consumer’s health?
The complaints departments should also deal with all queries received without delay
“Be clear about any specific time frames for disclosure in the policy,” they said. “Some policies require a consumer to declare conditions they’ve received treatment for in the past 12 or 24 months; others for the past five years. [It’s also useful to ask if] significant gaps or limitations in cover were clearly highlighted to consumers, both in the sales journey and the Insurance Product Information Document.”
The Covid-19 pandemic has added an extra level of complication to policy wording, with consumer expectations sometimes clashing with reality, and the FOS emphasise the importance of clarity in this respect: “Was the scope of ‘Covid cover’ clearly set out in the policy and easy to understand? Bear in mind that access to testing is more limited than at the start of the pandemic. The policy terms should clearly explain what the insurer will accept as evidence in the event of a claim. A consumer shouldn’t have to cross refer between different sections of the policy to work out what is and isn’t covered. We wouldn’t expect a consumer to have to check the additional cover options to help understand what’s covered or not covered as ‘standard’.”
The FOS advises insurers to take every opportunity to regularly revisit their policy terms and formatting, to see what can be improved and clarified. It is also useful to ask whether the policy reflects the current realities of travel – e.g. in relation to Covid-19 – as the FOS has frequently seen that policies don’t cover the sorts of things consumers typically expect to claim for. For instance, cancellation, curtailment and enforced stay.
Finally, the spokesperson said: “Think about how your team members are measured. What are your key performance metrics, and do they encourage the right behaviours to resolve complaints at the earliest opportunity without referral to the FOS?”
Of course, even if all this advice has been followed, some disputes will inevitably end up moving forward. So how can insurers best work with the FOS to ensure smooth and equitable outcomes for those involved?
Best foot forward
“It can be helpful to set out in the final response letter which business is responsible for the complaint,” the FOS said. “The involvement of third-party claims handlers and/or the ‘brand’ name of the policy can be confusing for consumers. [Insurers should also] provide the FOS with all information relevant to the complaint at the earliest opportunity, and use a covering letter/email to reiterate any key points to be taken into account by the ombudsman.”
Additionally, if an insurer is experiencing any sort of delay in responding to correspondence – to the extent that they may require an extension to agreed deadlines – the FOS needs to know at the earliest opportunity. As previously stated, clear and prompt communication is key, as the FOS pointed out: “Unexplained delays in replying, or failure to respond to FOS correspondence, delays complaint resolution for consumers, and may mean we need to reach an assessment about what’s fair and reasonable in the circumstances, based on limited information. Prompt payment of agreed settlements and/or final decision directions can avoid further frustration on the part of consumers, and time-consuming follow-up correspondence.”
Kaye also emphasised the importance of clarity and timely responses. “Insurers, brokers or intermediaries will receive notification of a case and it is the duty of both the consumer and insurer, broker or intermediary to provide all documentation (and calls) to the FOS, in order that they may review the case in its entirety and make a decision,” he said. “Insurers must not mislead consumers at any time – nor exceed the complaints timeline.”
Make sure team members fully understand any changes and updates to policy terms and listen carefully to what customers tell them
However, potential improvements could be made at the ombudsman’s end. “It may be worth considering whether the FOS complaints procedure could be enhanced,” Kaye said. “Sometimes insurers [do not have] sufficient time to investigate, [while] some cases could be seen as simple ones [that could be] closed with ease – therefore the relevant fee should be reduced to take this into account. The FOS will charge the fee regardless, with the argument that some cases take a substantial period to resolve.”
A special relationship
Nobody is happy to see a dispute escalate. And in the age of social media, where a viral tweet – whether accurate or not – can cause real, tangible damage to a company’s brand, it is more important than ever that businesses stay on top of things.
As our contributors have noted, this doesn’t just mean providing the necessary documentation and being cooperative once the FOS is involved, although that is of course essential. It starts before a dispute even has a chance to raise its head. Fires should ideally be put out while they’re barely smouldering. Even more ideal? Before they start to smoulder at all.