FCA warns against lowballing motor claim settlements
5 December 2022
The Financial Conduct Authority (FCA) has issued a warning to insurers after seeing evidence that some UK consumers are being offered a price lower than fair market value for cars written off after an accident.
In some cases, claims staff are only increasing the offer to the fair market price when a consumer complains.
“When making an insurance claim, people shouldn’t need to question whether they are being offered the right amount for their written off car or other goods that they need to replace,” FCA Consumers and Competition ED Sheldon Mills said.
“Insurance firms should offer settlements at the fair market value. This is especially important now as people struggling with the cost of living will be hit in the pocket at precisely the time they can ill afford it.”
Offering a price lower than fair market value is against FCA rules and the regulator is acting against firms found breaching requirements.
The FCA says the rising cost of living may be increasing pressure on insurers to control claims costs, but making offers lower than a customer is entitled to is likely to particularly affect consumers in vulnerable circumstances.
“We are watching the behaviour of firms closely and will act quickly to stop firms and prevent harm to consumers where we see it,” Mr Mills said.
The warning follows a letter sent to CEOs in September on FCA expectations around the cost of living and insurance.