Which? launches insurance 'super-complaint' against home and travel sector

Dean Sobers of Which? wrote on the organisation’s website that the super complaint follows a year of campaigns where it has been working to combat what it says are “poor practices” in the travel insurance and home insurance sectors. Which? conducted original research into insurers’ claims-handling practices, examined policy terms and conditions, and analysed trends in complaints and customers’ expectations of the insurance policies they buy, producing four in-depth reports.

It has also been in touch with policyholders who’ve have “received dismal service from their insurers when claiming”, said Which? “The findings have pointed to systemic problems with how policies are sold and explained, and also with how claims are then handled – particularly among home and travel insurance customers.”

Travel insurance data from 2024

The latest data from the Association of British Insurers (ABI) highlights the essential role of travel insurance, as its members paid out £472 million across more than 500,000 claims in 2024. In 2024, the total value of medical claims reached £262 million, with an average payout of £1,528. The total amount for medical claims reached £291 million in 2023, and the average medical claim stood at £1,724.

Super complaint to the Financial Conduct Authority

Which? is the UK's consumer champion and has a particular legal power, under which it can launch a super complaint against an industry. The last super-complaint it launched was in 2016, over concerns about banks’ treatment of victims of authorised push payment fraud. While initially rejected by the Payment Systems Regulator (PSR), the government eventually legislated to protect bank transfer fraud victims by introducing a mandatory system of reimbursement. Which? stated: “Our super-complaint isn’t about individual insurance firms – but about widespread problems in home and travel insurance, and the failure of the Financial Conduct Authority (FCA) to definitively tackle them. We think that, as a result, too many customers are being sold policies that don’t end up delivering as expected, and that claims-handling service levels aren’t up to scratch.”

The super complaint focuses on three key areas:

• To tackle the “failure” of home and travel insurance firms to comply with their legal obligations, taking enforcement action where necessary
• Asking the FCA to launch a market study (a kind of in-depth investigation of the market) to get to the bottom of what’s driving poor consumer outcomes for home and travel insurance customers
• Proposing that the FCA and government work together to review consumer protections in insurance, and how well those currently in place are really working in practice.

The FCA has 90 days to review and respond to the super-complaint. It could decide to take a number of actions as a result – including taking enforcement action against insurers, agreeing voluntary changes with the industry, conducting further investigations of its own, or recommending action by another body – such as another regulator or the government.

It could also decide that the complaint is unfounded or conclude that it requires no action.

Travel insurance complaints hit pre-pandemic high

Of the 198,798 new complaints the Financial Ombudsman Service (FOS) received between 1 April 2023 and 31 March 2024, there was a combined total of 4,466 complaints about travel insurance. That’s up from 3,745 in 2022–23.

It hasn't been this high since 2020–21, when complaints swelled to 8,175 because of the disruption caused by the Covid-19 pandemic. 

Not counting that year, complaints are now at their highest level within the past decade. In 2019–20 the FOS received just 2,510 new grievances about travel insurance – 78% less than in 2023–24.

Travel insurance complaints upheld by the FOS increased to 44% in 2023–24, up from 36% the previous year. That's even higher than during the pandemic in 2020–21, when the uphold rate was 38%.

ITIJ has contacted the ABI for comment.

Sara Perez, Executive Vice President for insurtech firm EIS, said that part of the issue was insurers not investing in technology that will allow them to cater more effectively to changing customer profiles: "

Consumers expect insurance to protect them when their home is burgled or when something goes wrong on holiday. Yet in too many cases, they only discover at the point of claim that their cover is riddled with exclusions they hadn’t realised were there, or that they are underinsured because their policy hasn’t kept up with life changes. Many insurers struggle to monitor these changes - not through lack of intent, but because outdated systems make it difficult to keep cover and premiums up to date. To rebuild trust, insurers need to move beyond their policy-centric silos and embrace a customer-centric model. That means modern platforms that make it easier to design, adapt, and explain cover in real time. It means breaking down barriers between departments so customers don’t fall through the cracks. And it means rethinking insurance not as a product transaction, but as an ongoing relationship of protection and trust."

ITIJ comment: As always, ITIJ is keen to understand consumer problems with travel insurance provision, and the ones highlighted by Which? are not new. Understanding the policy they are buying means reading detailed small print in policies, which many consumers often aren't willing to do. They also frequently focus on price, and sadly this often means that their expectation of what a policy should cover is at odds with the reality of the insurance policy they are buying. Declaring their medical conditions in full is another issue that the insurance sector is trying hard to manage - by asking the right questions, investing in new solutions that ensure the underwriting is correct, pricing is correct and risk is managed appropriately. When customers have declared their medical conditions in full, they are able to find comprehensive travel insurance that covers them for their conditions and will thus pay out should they fall ill while on holiday.

While there are always going to be a few companies that don't meet their customer expectations through human error, in our experience it is also a lack of consumer awareness and understanding of the policy they have bought that results in claims being declined. 

Travel insurance is an incredibly complex product, with myriad benefits that require careful underwriting and a deep understanding of the risks posed. It can provide a lifeline in a traveller's worst moments, and should be a more considered purchase - not something that is a last-minute purchase at the airport, and certainly not one where the cheapest is just as good as the most expensive. 

Understanding what is driving "poor outcomes", as Which? describes them, is key to the industry adapting and continuing its journey in improving customer protection and enhancing the services it offers to UK travellers. If the FCA does conduct a market study, as requested by Which? it will be very interesting to consider the results.

For context:
There are around 85M trips taken each year, with 75% of travelers buying insurance.
In 2023/24, there were 4,477 travel insurance complaints.

By comparison, the Financial Ombudsman Service handled 80,137 complaints on banking/payments and 16,322 complaints on motor insurance in the same period.