Private medical and health insurance is proportionally the second most complained about financial product – and it is getting worse.
Latest data from the Financial Conduct Authority (FCA) showed the product line was second only to second charge mortgage lending in complaints per 1,000 policies for the first six months of 2024.
Year-on-year grievances jumped 12.5% to 9.9 complaints per 1,000 polices from January to June 2024, up from 8.8 in the same period of 2023.
There was an equally sharp uptick in the raw number of complaints logged by the regulator during the period, with 95,886 complaints made in the first half of 2024, up by 10,570 from 85,316 a year earlier.
Private medical insurance providers also performed poorly on the regulator’s firm-level data, with Axa Health and Bupa taking the worst and eighth worst spots in the insurance and pure protection section.
The regulator requires firms to provide their total number of opened complaints divided by the number of accounts or policies currently in force, and it then normalises this rate per 1,000 policies in force.
However, it only publishes firm-specific data for firms reporting 500 or more complaints in a half-year period.
Provider-level data
Axa Health received 36.75 complaints per 1,000 policies, the highest across all insurance and pure protection providers, and only lower than five other financial services providers published by the FCA. It upheld 47.99% of all complaints.
Bupa was the eighth highest across insurance and pure protection providers with 10.08 complaints per 1,000 customers with more than half, 56.63%, upheld.
Aviva Health was listed under the intermediation section and received 8.48 complaints per 1,000 policies, with 48.73 upheld.
Due to the way some data is presented by the regulator and financial bodies, making further comparisons can be difficult.
For example, Vitality Corporate Services, which administers the Vitality group’s health and protection insurance products received, 5.27 complaints per 1,000, with 53.93% upheld.
The Exeter, which offers health and protection insurance products received 1.74 complaints per 1,000 polices under the provider data and 1.98 complaints per 1,000 in intermediation. It upheld 13.95% of complaints overall.
Axa Health told Health & Protection it was continuously looking at ways to improve service to customers and welcomed the greater transparency provided by the FCA data.
It said: “Insurers take different approaches to logging, categorising and handling complaints.
“While we believe our approach is effective and provides the best service for our customers, it does mean we may compare differently across some metrics.
“In addition to this, insurers also report complaints differently across the health and protection market specifically, for example measuring complaints against number of lives or against number of policies.
“This can distort comparisons between firms as most policies have more than one life insured.
“We have a good customer satisfaction score, a great Trustpilot rating and low referrals and upheld complaints to the Financial Ombudsman Service (FOS).
The Association of British Insurers (ABI) told Health & Protection that insurers’ first priority is to support their customers, and the majority of claims are accepted.
“Our members know that having to make a claim usually means an individual has already experienced incredibly difficult circumstances, and they want to make the process as easy as possible,” it said.
“It’s always concerning to hear when that isn’t the case and they will try to deal with complaints efficiently and fairly.
“When complaints are passed to the FOS, we and our members will work with the ombudsman to understand any opportunities to learn from them and improve processes.”
Health & Protection also contacted Bupa about its complaints figures but the insurer did not respond.
Protection sector remains low
In contrast, the protection sector again appeared to be one of the least complained about markets covered by the FCA, with the main categories in the bottom third of FCA data.
Complaints numbers for whole of life, term assurance and critical illness products, as collectively gathered by the FCA, dropped to 24,672 from 27,094 in the first half of 2023 – with the contextual figure largely unchanged at 0.8 complaints per 1,000 in force policies.
Income protection is combined with other accident, sickness and unemployment products and this saw a 10% increase to 4,100 complaints from 3,724 a year earlier, with the rate increasing to 0.9 complaints per 1,000 policies from 0.3.
Other pure protection complaints dropped from 602 to 466 and from 0.3 to 0.1 per 1,000 policies.
Overall, 764,254 complaints were received about all insurance and pure protection the FCA reported, down from 798,951 a year earlier but up slightly from 754,010 in the second half of 2023.
And in total, 1,864,268 complaints were made about the financial sector, up slightly from 1,885,474 a year earlier, but down from 1,938,953 in the second half of 2023.
FOS complaints
The Financial Ombudsman Service (FOS) also reported the complaints it had received during the first half of the year alongside the FCA data.
It has seen an 8% year-on-year decline in pure protection and general insurance (GI) complaints in the first six months of the year, with 22,489 complaints made compared to 24,496 in H1 2023.
The FOS does not breakdown figures into further product areas but it provided data by the number of complaints received per company.
Using this we can see complaints among three of the four largest private medical insurance (PMI) providers collectively dropped from 558 to 509.
This was largely due to Vitality Health where complaints made to FOS about its products fell to 154 from 229.
In contrast both Bupa (178) and Axa Health (177) saw increased grievances made to the FOS, up from 169 and 160 respectively.
Vitality Health had the highest upheld rate of the trio at 35%, followed by Bupa at 24% (up from 11%) and Axa Health on 17% (up from 12%).
Data for Aviva Health, the third largest PMI provider in the UK, like many others is not separated out by the FOS.
By number of complaints received by FOS in H1 2024, other major protection and health insurance firms rank as follows:
Covea Insurance – 260
Legal & General Assurance – 205
Aviva Life and Pensions UK – 121
Unum – 51
Zurich Assurance – 48
Royal London – 47
Phoenix Life -41
Vitality Life – 31
Scottish Widows -28
Liverpool Victoria Financial Services (LV=) – 24
AIG Life -23
Reassure -21
Scottish Friendly -20
Canada Life -18
Sun Life Assurance Company of Canada – 7
St. James’ Place Wealth Management – 5
Bucked the trend
The slide in insurance and protection sectors bucked the overall trend as FOS revealed complaints numbers rose by more than 40% year-on-year in the first half of 2024.
It received a total of 133,019 complaints between 1 January and 30 June 2024 compared to 93,114 complaints in the same period of 2023.
Abby Thomas, CEO and chief ombudsman at the FOS, (pictured) said: “Businesses should put consumers at the heart of their service but the high level of complaints we receive shows that’s not always the case.
“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 people don’t feel they’ve been treated fairly by their financial provider, they can come directly to our service and we’ll see if we can help. Getting a fair answer is free and easy.”
