More than one in four private medical insurance (PMI) and dental insurance complaints resolved by the Financial Ombudsman Service (FOS) from April to June were upheld, with service and claims handling the main culprits.
In contrast, the rate of successful income protection (IP) complaints halved during the three months compared to the same period last year, typifying a downward trend in protection.
PMI service issues
The regulator approved 29% of the combined PMI and dental insurance complaints it resolved in the first quarter of the 2024-25 financial year – up from 19% a year earlier.
However, the number of complaints received by the FOS regarding the products fell by 4.6% or 20 cases to 414 from 434 last year.
The ombudsman was not able to share exact figures with Health & Protection, but outlined the key reasons for the cases it upheld, singling out delays to claims handling and customer service.
“We are seeing increased numbers of complaints about private medical insurance due, in part, to a higher prevalence of people buying these policies,” the FOS said.
“We see complaints about a wide variety of issues including mis-sale, misrepresentation of pre-existing medical conditions, exclusions relating to pre-existing medical conditions under moratorium clauses, complaints about benefits associated with these policies, premium pricing, and general admin issues.
“Our highest percentage of upheld complaints in this area tend to involve delays in responding to claims and customer service and administration issues,” it added.
Protection improvements
Meanwhile, the regulator reported the rate of complaints upheld concerning the three main protection products, term assurance, critical illness (CI) and IP all fell.
Income protection saw the greatest drop with only 15% of cases upheld during the first quarter of 2024-25 compared to 32% a year ago.
However, the number of complaints received regarding IP policies rose from 160 to 194 in the period which pushed the total number of protection complaints received to 534, higher than 2023-24.
Upheld rates for complaints about term assurance and CI dipped from 16% to 15% and from 17% to 14% respectively, as did the number of complaints made.
Complaints about reviewable whole of life products rose to 119 from 109 with the upheld rate also increasing to 37% from 31%, while non-reviewable product complaints dropped to 89 from 119 with the upheld rate largely unchanged at 23%.
The FOS noted the main complaints in this sector are regarding claim declines, mis-sale and customer service and can include more than one of these issues.
Professional complaint submissions soar
Overall compared to the whole financial services market health and protection insurance complaints remain a small proportion of the FOS case load, totalling fewer than 1,000 cases.
This was especially so as complaints received from April to June were 70% higher than the same three months in 2023 with 74,645 cases lodged compared to 43,953.
Credit cards were the most complained about product generating 18,175 complaints, followed by hire purchase motor agreements with 15,925, of which around three-quarters related to motor finance commission.
However, FOS highlighted the most notable trend that professional representatives were driving significantly higher volumes of complaints, but were less successful than individual consumers.
Professional representatives accounted for around half of the complaints received compared to just 17% in the first three months of 2023/24.
But only 25% of claims brought by professional representatives were upheld while those brought directly by consumers to the Ombudsman for free succeeded 40% of the time.
FOS noted that professional representatives were particularly prevalent in driving volumes for the largest categories.
More than half of credit card complaints came through this channel as did more than 90% of motor finance commission complaints.
‘Concerning complaints volume’
FOS chief executive and chief ombudsman Abby Thomas said: “It’s concerning that we’re continuing to see large volumes of complaints, particularly considering the cost-of-living crisis.
“It’s vital that businesses are open and transparent with their customers, treating them with fairness and understanding.
“While professional representatives have an important role to play, they must ensure that their cases are well evidenced and have merit.
“If consumers have a dispute with their bank or finance provider they can come directly to our easy-to-use service for free and we will see if we can help.”