FCA warns auto insurers about undervaluing written-off cars

Share
The UK's financial regulator has warned car insurers about the increasingly prevalent practice of valuing written-off vehicles below fair market rate

The UK’s financial regulator has warned insurers about undervaluing cars and other insured assets when settling insurance claims.

The Financial Conduct Authority (FCA) says it “has seen evidence that some consumers who have had their cars written off after an accident are being offered by their insurance providers a price lower than the vehicle’s fair market value”.

The FCA suggests that some insurers are knowingly attempting to cut costs by offering a value below fair market rate, which is not permitted according to UK rules, and then only correcting the value of their offer when an affected customer complains. The FCA has reminded insurers that this practice “is unfair and is likely to disproportionately affect consumers in vulnerable circumstances”.

Many consumers in the UK are struggling with a cost-of-living crisis, and an unexpected bill – like a family vehicle being out of service – would prove inhibitive to many. The FCA appears to have reminded insurers of their obligations in the event that an insured’s vehicle has been written off.

FCA acting decisively ‘to prevent harm’

Sheldon Mills, Executive Director for Consumers and Competition at the FCA, says: “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. 

“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. 

“We are watching the behaviour of firms closely and will act quickly to stop firms and prevent harm to consumers where we see it.”

Share

Featured Articles

Advania Asks: Can the Lloyd’s Market Use Tech to Evolve?

Advania’s ‘Insurance at the Digital Frontier’ report explores how an era of digital reform will redefine the capabilities of the insurance industry

Qantev and INSTANDA Partner to Drive Digital Transformation

The partnership will empower insurers to launch new products, improve customer satisfaction and automate claims processing

How ESG Data is Reshaping Insurance Underwriting

PwC, Capgemini, KYND & Novidea explain how ESG data is transforming insurance underwriting, influencing risk assessment, compliance and cyber security

Munich Re: Digital Health Records Cut Insurance Risk by 35%

Insurtech

Glia Survey Shows Contact Centre Tech Failing FIs & Insurers

Insurtech

AXA Launches Innovative Insurance Shield for DRC Farmers

Insurtech