Insurers are undervaluing policy holders’ cars, FCA warns
The UK’s financial watchdog has warned insurers against undervaluing policyholders’ vehicles after seeing evidence of customers being offered payouts less than their cars are worth.
The Financial Conduct Authority (FCA) said it had seen evidence of customers who have had their cars written off being offered less money than their vehicle’s fair market price.
It warned that in some cases, insurance company claims staff are only increasing their offers after receiving customer complaints.
The FCA’s executive director of consumers and competition, Sheldon Mills, said: “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.”
The watchdog warned it will take action against any firms found to have broken rules, including those around offering policyholders less than market value payouts for their claims.
“Insurance firms should offer settlements at the fair market value,” Mills said. ‘We are watching the behaviour of firms closely and will act quickly to stop firms and prevent harm to consumers where we see it.”
The FCA’s warning comes after the Association of British Insurers (ABI) warned average car insurance premiums increased three per cent from Q2 to Q3 to average prices of £436.
Inflationary pressures have seen the average cost of repairing a vehicle increase by 16 per cent over the past year to just over £3,000.
Global supply chain issues and worldwide semiconductor shortages have also seen used car price increase 30 per cent compared to 2021, data from Auto Trader shows.