Complaints about private medical and dental cover, and income protection insurance (IP) rose sharply in the last financial year, according to data from the Financial Ombudsman Service (FOS).
The service received 1,476 new complaints about health and dental insurance in 2020-21, up by 45% from 1,021 the previous year, while 1,054 IP complaints were submitted, a rise of 20% from the 877 previously.
However, the rate of complaints being upheld in both categories dipped slightly, with 16% of health complaints and 19% of IP complaints upheld – down from 19% and 21% respectively.
Comparisons for term life insurance, critical illness (CI) cover and whole-of-life assurance are more difficult due to changes in how the FOS records the data.
Overall, 3,613 complaints were received relating to these products – down from 4,050 the previous year.
A combined 12% of these claims were upheld, compared with 14% of term assurance claims in 2019-20, 17% of CI claims and 18% of whole-of-life claims.
In all the health and protection sectors remain among the lowest areas of concern within the financial services industry, accounting for just 6,158 new cases.
However, the FOS highlighted that it had heard from consumers with private medical insurance, who were unhappy about being unable to access treatment they wanted due to limitations on health services, publishing a details case study of one situation.
It also published a case study of one complaint lodged by a customer unhappy with his IP provider, but backed the insurer’s decision.
“Many complaints could be prevented by insurers providing clearer guidance about the information that consumers need to disclose during the sales process – particularly for sales taking place via price comparison websites,” said ombudsman Leah Nagle.
“Insurers could also make the consequences of customers misrepresenting, or not telling them about important changes, much clearer.
“Some people we hear from just haven’t understood how serious the consequences can be,” she added.
Non-PPI complaints soar
Overall, 278,033 new complaints were received by the FOS, which was up 2% on the previous year.
Excluding payment protection insurance (PPI), the figures revealed a 58% increase in the volume of complaints, with 235,993 new non-PPI cases compared to 149,315 non-PPI complaints in 2019/20.
The sharp increase in non-PPI complaints was largely driven by a 66% increase in complaints about banking and credit products, with 170,648 complaints being received in 2020/21, compared with 103,070 in 2019/20.
Current accounts and unaffordable lending were the areas of most concern here while 83% of resolved home credit products were upheld in favour of the customer.
Insurance complaints increased 36%, with 44,487 new cases submitted, up from 32,637 in 2019/20.
And complaints about investments and pensions almost doubled to 20,854 from 10,920 – a 91% increase.
Nausicaa Delfas, interim chief executive and chief ombudsman of the FOS, said: “Over the past year, we have seen demand for our service increase significantly, and our teams are working to provide resolutions in cases as quickly as they can.
“The sharp increase in complaints about issues other than PPI is a reminder that it has rarely been more important for financial businesses to support their customers when things go wrong.
“As people continue to deal with the impact of Covid-19 on their lives and finances, they know they can come to our service if they’re not happy with how a financial business has treated them.”