MILLIONS of households are being “ripped off” on home and travel insurance, says consumer watchdog Which?.
It has called on the financial regulator to take urgent action with a rare super-complaint.
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The organisation claims poor claims-handling and unclear policy terms are leaving customers stranded at their most vulnerable moments.
Which? argues that these two types of insurance have some of the lowest claims acceptance rates, with home insurance at just 63% cent and single-trip travel insurance at 80.4%.
Over the past year, Which?’s “end the insurance rip-off” campaigning work has produced research reports which the consumer group said exposes poor customer experiences.
These include consumer confusion over what policies cover and frustratingly substandard treatment during the claims process.
It said it is launching a super-complaint now “because consumers cannot afford to wait any longer”.
The super-complaint focuses on three main concerns – poor claims-handling, inappropriate sales processes, and what it claims is a lack of application and enforcement of FCA rules and other relevant law.
Rocio Concha, Which? director of policy and advocacy, said: “Which? using its legal powers to submit a super-complaint is a major intervention – but we believe it is necessary as serious failings in home and travel insurance have been tolerated for too long by the insurance industry and its regulator.
“Our evidence that the home and travel insurance markets are not working well is overwhelming and we have heard heartbreaking stories from people who have found the experience of dealing with an insurance company worse than the distressing life events that led to their claim.”
By law, the regulator has 90 days to respond to Which?’s super-complaint.
The complaint, which applies to the markets as a whole rather than specific companies, comes after Which? uncovered poor customer experiences in its research, including cases of confusing policy exclusions and substandard claims handling.
Customers have reported being denied payouts for unexpected reasons, including technical loopholes and unclear policy wording.
Thousands left out of pocket
Which? said it has heard from hundreds of people “who have been left to endure ordeals at the hands of their insurers”.
One customer shared how her holiday to Egypt was cut short after a flight issue just two hours into her journey.
She was refunded for her flights but left out of pocket for accommodation and travel costs, as her insurer Axa ruled her trip had technically “taken place”.
Following pressure from Which?, the insurer later apologised, settled the claim in full, and offered compensation for the delay.
A spokesperson for Axa Partners said it apologised for the issues and “upon further review, we have settled her claim in full and offered compensation in recognition of the delays”.
In another case seen by Which?, a water pipe burst under a man’s home, but his insurer, Churchill, told him he was not covered for the damage to the pipe itself.
He was told he would have needed to take out extra cover.
The customer believes such exclusions should be made much clearer to customers when they are taking out policies, Which? said.
The man told Which? that Churchill only offered to help with redecoration costs, but in the end, he cancelled his claim with Churchill and paid for decoration costs himself.
A spokesperson for Churchill said a plumber had “confirmed the leak was due to wear and tear of the pipe, which is typically excluded under home insurance policies”.
The spokesperson said the man was advised that he could claim for the plumber’s investigation, damage caused by accessing the pipe, and any water damage caused by the leak but “we advised that the damage to the pipe itself would not be covered”.
The spokesperson said that if the customer is able to provide further documentation about the repairs to his property, “we will be happy to review the claim”.
What is a super complaint?
A SUPER-complaint is a powerful legal tool that allows certain consumer organisations, like Which?, to raise concerns about widespread issues that harm large numbers of customers in a specific market.
It is designed to highlight practices that significantly affect consumers and demand urgent attention from regulators.
The Financial Conduct Authority (FCA) must respond to a super-complaint within 90 days, outlining whether it agrees with the concerns raised and detailing any action it plans to take.
Super-complaints are rare but can lead to major changes.
Which? last used this tool in 2016 to tackle banks’ poor handling of authorised push payment (APP) fraud.
While initially rejected, the campaign eventually led to new laws forcing banks to reimburse victims of bank transfer scams.
What has the regulator said?
An FCA spokesperson said: “Insurance should provide peace of mind and fair value.
“That’s why we have been focused on raising standards, including banning the loyalty penalty, securing £200million compensation for underpaid motor claims and investigating value in premium finance.
“We uncovered issues when we recently reviewed insurers’ home and travel claims handling. We’ll be holding them and their senior managers accountable for the changes needed.
“We’ll respond to Which? in due course.”
Which? said that home and travel insurance products are widely held by UK consumers, and hugely important for society and the economy.
In 2024, 32million UK adults held contents insurance and 29million held buildings insurance, whilst 15million and 13million adults held annual and single-trip travel insurance, respectively, it added.
A spokesperson for the Association of British Insurers (ABI) said: “Insurers take their responsibility to protect their customers incredibly seriously.
“As a crucial financial safety net, our members work hard to ensure their customers know the details of their policy cover and handle claims as quickly and efficiently as possible.
“In the first half of this year alone, insurers have paid out over £1.7billion for more than 300,000 home insurance claims.
“Last year, travel insurers also paid out £472million across more than 500,000 claims.
“We’re working closely with the regulator to ensure good outcomes for customers and will engage with Which? to understand the details of its concerns.”
