Health and income protection (IP) insurance complaints reported to the Financial Conduct Authority (FCA) rose in 2024, according to latest data from the regulator.
However, complaints about life and critical illness did fall during the year.
Total complaints received by firms for private medical insurance (PMI) and health insurance products rose by 7,352 or 4.5% in 2024 – increasing to 172,961 from 165,609 in 2023.
Despite the annual increase, there was a significant decline in these complaints for the second half of 2024, when the FCA received 77,075 grievances compared to 95,886 for the first six months, a drop of almost 20%.
As a result of this, the sector dropped to the fifth most complained about sector with 7.3 complaints per 1,000 policies – down from the 9.9 per 1,000 in H1 which was the second most in the whole of financial services.
The biggest percentage increase was seen for income protection, with 8,235 complaints received by the regulator in 2024 – an increase of 778 complaints or 10.4% from 7,457 the previous year.
Notably, this 10% increase was maintained across the year with 4,108 complaints in the first half of 2024 compared to 4,527 in the second half.
It was a different story for whole of life, term assurance and critical illness products, which are combined by the FCA, where there was an annual decline of 4.8% from 50,746 in 2023 to 48,296.
This was mainly due to the second half of 2024, with issues declining from 24,674 in the first half of 2024 to 23,622 for the second half – a fall of about 4%.
Total complaints down in second half
Overall complaints to financial service firms declined by 4.3%, for a total of 1.78 million complaints, down from 1.86 million in the first half of 2024, according to the FCA – for an annual total of 3.74 million complaints.
Since the first half of 2021 annual complaints reported by the FCA have stayed relatively constant between 1.7 million and 2.0 million.
The percentage of complaints that were upheld by firms remained around 57% between H1 and H2 2024.
But the amount of redress declined slightly to £236m for the second half of 2024, which represented a 3% decrease on the 2024 H1 figure of £243m.
Firms are required to report complaints from eligible complainants about activities carried out from an establishment maintained by the firm or their appointed representative in the UK.
The complaints data may also include complaints made by retail clients, professional clients, and any other eligible counterparties.
A complaint is considered resolved when the complainant has indicated that they accept the firm’s response to their complaint. It is not mandatory for either the response or the acceptance to be in writing.
Small drop for now
Darren Richards, head of insurance, regulatory and risk at Broadstone, said on the decline seen in the second half of 2024 that: “Given the immense scrutiny from the FCA on consumer outcomes and fair treatment, the regulator will be pleased to see the number of complaints falling across all major product groups.
“While the drop is a small one for now, it nonetheless marks a step in the right direction and suggests that initiatives like Consumer Duty are starting to pay dividends.
“Markets remain volatile and consumer confidence shaky, so financial services firms need to retain a laser focus on ensuring they are looking after the long-term financial interests of their customers throughout their interactions.
“Redress remains a costly outgoing for firms – as the ongoing motor finance case should be a reminder of – so it quite literally pays to treat customers fairly.”