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Failings revealed in mobile phone insurance sector

Failings revealed in mobile phone insurance sector

Category: Mobile Phones

Updated: 27/06/2013
First Published: 27/06/2013

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

An investigation by the Financial Conduct Authority (FCA) has uncovered a series of issues in the way claims are handled by mobile phone insurance companies.

The practices of nine insurers were studied by the regulator, with aspects such as the design of policies, clarity of terms and conditions and the handling of claims pulled under the microscope.

Results of the study published today, however, have flagged up a number of failings, including instances where customers were found to have been treated unfairly.

  • Insurance companies had regularly failed to look into why high numbers of customers' claims were being rejected, and had not implemented such concerns when designing their insurance products
  • A number of mobile phone insurance products had not been designed to meet the needs of consumers
  • The majority of insurance policies pledged to cover the loss of a phone, but were often found not to cover instances where the customer had accidentally misplaced their phone
  • Explanations of what a policy covers were deemed too broad and ambiguous. Terminology such as 'public places' were also found to have impeded customers' ability to make a successful claim
  • Numerous examples of inadequate claims and complaints handling were also reported

The FCA said it had liaised with the insurers that had participated in the review and confirmed steps are being taken to improve service and practices.

The study of the mobile phone insurance sector is understood to be part of an ongoing review by the FCA into all regulated financial companies and the supervision of those that are not supervised by the Prudential Regulation Authority (PRA).

The FCA's director of supervision, Clive Adamson, said: "With mobile phones now essential to our lives, and mobile phone insurance often many young people's first foray into insurance, it is important that insurance policies provide the level of protection that they promise, and claims processes are fair.

"What this review shows is that sometimes there is a gap between what the customer thinks they are getting, and what they are really getting. Closing this gap will lead to greater trust and confidence," he stated.

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