The Financial Conduct Authority (FCA) has highlighted some of the good practices found in its review of the bereavement claims process and urged insurers to take note of them and potential areas for improvement.
These included measures to improve recruitment and retention of claims assessors, how evidence is collected and the additional support services offered to families.
Overall the FCA was highly critical of the claims processes presented by insurers across the life insurance market, revealing that performance was often poor with some insurers missing their own internal targets for more than a year at a time.
However it did explain some bright spots where insurers had been proactive and sought to assist consumers.
Staff challenges
Almost all firms told the FCA about challenges in recruiting and retaining experienced staff, particularly claim assessors, noting that without this key resource the claims process can quickly slow down.
The FCA noted that a combination of people leaving the industry, flexible and remote working arrangements, and a competitive and more transient labour market, had left many firms short of experienced resource.
But it found some good practices in how insurers had reacted to this challenge, including better pay and training.
“We found firms have reassessed their remuneration packages, introduced training schemes to upskill existing staff and designed new internal career progression programmes,” the FCA said.
“This is a positive response, but it has not fully resolved the short-term pressures.
“Firms reported that the recruitment and training of new staff on bereavement claim processes can take between three and six months, which can extend to 12 months to attain full proficiency.”
The regulator said it recognised the challenges firms were experiencing in relation to resourcing, and acknowledged the initiatives being taken to address these, but said it expected firms to be resourced with sufficient, well-trained staff to service the products they have sold or acquired.
Documentation requirements
The sharing and obtaining of documentation, medical records and other forms can be a significant cause of delays in the life claims process.
Firms told the FCA that delays in receiving documentation back from customers and third parties, such as death certificates, grant of probate, claim forms and medical evidence, often extended the journey time.
The FCA noted that firms had different risk tolerance levels when setting the claim limits that required documental evidence.
However, the regulator praised some initiatives that sought to reduce these steps as much as possible. These included:
- use of electronic verification of death, avoiding the need for claimants to send in death certificates,
- accepting medical evidence provided by the claimant, avoiding the need to contact medical practitioners,
- paperless claim journeys for lower risk claims, avoiding the need to complete claim forms,
- establishing digital channels to accept documents and using text messages to communicate quickly with claimants.
The FCA said that under the consumer support outcome of the Consumer Duty, firms should support customers in realising the benefits of their policy without unreasonable barriers.
An example of a barrier could include a complex claims process requiring customers to provide hard copies of all evidence.
“Although it is up to each firm to decide their risk tolerances for requiring documentation, they should not impose unreasonably restrictive, rigid, or arbitrary administrative requirements on customers that create barriers to them making a claim,” it added.
Support services
All the firms in the FCA sample of 15 providers offered some additional support to claimants and relatives of the deceased.
This was either through pointing them to third-party support services or through support services built into the contracts, including bereavement counselling and support for estate administration.
However, the regulator noted access to some of these benefits was limited to customers holding certain product types, and not all benefits were accessible to all customers.
Most firms were also signed up to a pledge to help families where they needed to pay funeral costs, but the insurer had not been able to pay the claim due to probate not being resolved.
A few firms were making experiences more personal such as providing individual gifts.
And one firm was using text analytics so that real-time additional support can be provided.
The FCA was pleased that firms were able to fully articulate the support measures on offer to enable them to respond flexibly to their customers’ needs.
“We noted the widespread availability of a range of customer service approaches, such as communicating via Braille or audio and using a tell us once approach, preventing the need for customers to repeat potentially sensitive information,” it said.
The FCA continued: “We do not prescribe which channels of support a firm must offer but firms must make sure those channels meet customer needs and should monitor the support they provide.
“We expect firms to have evidence of how they are taking practical action to understand the needs of vulnerable customers.
“We expect firms to make sure their staff have the appropriate skills and capability to respond accordingly. Firms should consider their approach in the context of our guidance for firms on the fair treatment of vulnerable customers,” it added.