Human Error Key Cause of Consumer Complaints

While human error accounted for almost half the complaints made to insurers by consumers in the 2023/24 year, the figure is less than the previous year.

In total, 22 insurers told the independent body that oversees the Life Insurance Code of Practice that they collectively received 60,303 complaints, a drop of 20% on 2022/23’s 75,256.

The Code Compliance Committee’s latest report shows the top three areas for grievance are service (36%), policy cancellation and changes (18%), and sales practices (8%).

However, self-reported breaches of the code were up 19% on the previous year with some of the reasons given as:

• Human error: 6,489, up 44% from 2023’s 4,484

  

• Staff not following procedures: 3,195, up 22% from 2023’s 1,694
• Resourcing issues: 1,004, up 13% from 2023’s 2,281
• System issues: 1,004, up 7% from 2023’s 367

The report notes the increase is attributed to improved identification and reporting rather than solely an increase in non-compliance.

Claims of staff causing breaches by not following company procedure were reported as isolated incidents by insurers, indicating an increasing tendency to attribute breaches to individual staff errors rather than systemic failings, states the report. Five insurers accounted for 90% of the breaches.

Insurers also reported that breaches affected a total of 210,442 customers in 2023/24, almost twice as many as the 106,266 reported in 2022-23 – but far less than 2020/21’s 429,347.

Addressing delays in claims processing must remain a priority, says McClelland.

“Customers rely on these payments for financial security, and insurers must ensure that claims are assessed and finalised in a timely manner.

…insurers should continue to review their approach to financial hardship assistance…

Of those who subscribe to the code are 16 insurers, five reinsurers, and one independent service provider. Together they are responsible for 28.4 million in-force covers.

“Given the risk of consumer detriment when processes and systems do not work as intended, all insurers should continue to review their approach to financial hardship assistance,” says Jan McClelland, Independent Chair, Life Code Compliance Committee.

“Insurers that report high numbers of breaches must ensure they provide timely, effective and accessible support.

“And insurers that report few or no breaches need to be confident that they are not failing to identify issues.”