The Financial Conduct Authority has told insurance firms to strengthen the way they monitor client outcomes as part of the consumer duty after 'disappointing' findings.
The FCA asked 20 large insurance firms for their most recent board or committee reporting at the end of 2023 as part of a multi-firm review of outcomes monitoring under consumer duty.
It asked them to show how they monitor the outcomes customers are receiving and for any action they had taken after identifying poor outcomes.
It found while most insurers were monitoring the timeliness of claims and the number of declined claims there was little monitoring of whether overall good outcomes were being achieved in relation to settlements.
In the review, published on Wednesday (June 26), the FCA said: “We assessed firm approaches for monitoring against the four consumer duty outcomes.
“For most of the firms in this review, and across all four outcomes, the monitoring information should be strengthened to ensure it is outcomes, rather than process-driven, and comprehensive enough to provide the relevant board or committee a reasonable view of whether the requirements of the duty were being met."
The review also found evidence of firms not collecting sufficient data to monitor outcomes.
However, some firms were able to provide comprehensive insights on consumer outcomes with deep dive analysis and employee surveys.
The FCA said it expects firms to be able to monitor the outcomes provided, identify where customers or groups of customers are not getting good outcomes, understand why, and take appropriate action to address the situation.
Most firms could point to some form of process improvements made, such as amending sales documents or changing a claims process.
However, some firms did not provide any examples of actions taken as a direct response to poor outcomes identified through monitoring or provided actions which did not show how an improvement to customer outcomes had been delivered.
The FCA said it was “disappointed” to find some firms have continued to repackage existing data to make up their data strategies, which it first highlighted as a problem in January 2023.
Another area it looked at was monitoring outcomes for vulnerable customers.
Good practice here included a firm which identified vulnerable customers were having claims declined more frequently so investigated and made changes to its claims processes and training for claims handlers.
But poor practice in this area included firms not differentiating by characteristics of vulnerability in its monitoring data.
tara.o'connor@ft.com
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