Findings of our multi-firm review of life insurers’ bereavement claim process

For this review, we wanted to establish what the average end-to-end journey time was for a bereavement claim, from the time a claimant first contacts a firm to the date the claim is paid. We asked firms to split this information across the four product categories.

Only a few firms were able to provide an average end-to-end journey time split across each of the four product types. The remaining firms could only provide a figure for some products, or a combined figure across multiple products. In some cases, this included products not within the scope of our work, such as Pension Plans or Life Bonds. Some firms measure the performance of individual servicing teams, rather than at an aggregated product level.

A good practice observed at a small number of firms was the ability to separate end-to-end journey times, at the product type level, between the journey for a non-medically assessed claim and that of a medically assessed claim.

Where we could use the data to allow accurate end-to-end average journey time comparisons to be made, we established the following for each of the product types. 

Term insurance

Term Insurance claims tended to take the longest time. This is because claim values tend to be higher, and claims are more likely to go through more rigorous checks. This often includes requesting further medical evidence.

We found across our sample of firms that for a Term Insurance bereavement claim the majority of firms averaged between 53 and 122 days.

Group Life

The structure of Group Life policy arrangements differs to Individual Life policies; the customer being the employer who provides death in service benefits to employees. Due to this tripartite relationship, we found there is often an added layer to the process, whereby claims are received by the employer before being passed to the insurer for processing. Most firms told us this period was not included in the data and may account for the shortened processing time reported.

Within this context, we found the average time for the firms to process a Group Life bereavement claim once they had received it was within 36 days.

Over-50 Plans 

We found that, with Over-50 Plans often featuring a smaller sum assured, and with many firms providing guaranteed claims acceptance, claims were generally paid more quickly than other bereavement products.

Our review suggested that about half of the firms in our sample complete Over-50s claims within 20 days on average.

Whole of Life

The different uses for this product mean that the sum assured can vary significantly between, for example, a policy to back a regulated funeral plan and a policy to cover Inheritance Tax (IHT) liabilities. Firms processing older books of business with smaller value sums assured tended to process claims more quickly as they were less likely to require further medical evidence.

Our review suggested that about half of the firms in our sample complete Whole of Life claims within 53 days on average.

What we expect

We are concerned about some firms’ inability to assess end-to-end service journey times at a product level. This may restrict a firm’s ability to monitor and meet their obligations to support their customers under the Duty. We would remind firms on their obligations to comply with existing fair value rules in PROD, as relevant, and whilst compliance with these rules would satisfy the price and value outcome of the Duty, firms in this situation should take a step back and consider their conduct in light of additional requirements under the Duty, such as the cross-cutting rules.

Such information will also support the reviews that make sure products and services do not adversely affect groups of customers in the firms’ target markets, including groups that may be considered vulnerable.

Where firms do group products together when measuring outcomes, we remind them that, they should still be able to give evidence that each of their products offer fair value. Firms should collect and analyse MI to enable them to understand and monitor consumer outcomes. Although the data and insights used will depend on the type and size of the product or firm, firms should only group products in a value assessment where it does not affect their ability to assess those individual products appropriately.

Each firm in our sample had its own service metrics or SLAs against which it measures its servicing performance for bereavement claims. There were also instances of SLAs differing across servicing teams within firms, and to those used by their Outsource Service Providers (OSPs). These SLAs ranged from measuring individual processes (within the end-to-end journey) to measuring the full end-to-end journey times, with some firms operating several hybrid variations.

A small number of firms could not provide SLAs for some of their bereavement claims processes. We also saw SLAs that were an amalgamation of processes.

What we expect

We expect firms to be able to effectively monitor whether they are providing a poor or slow service, and to avoid causing foreseeable harm, under the Consumer Support outcome of the Duty. We also expect firms to set service measures that are clear and realistically reflect good customer outcomes across all their servicing teams. This includes those operated by OSPs and where firms have inherited SLAs from acquired books of business. Individual process level reporting can help detect pockets of poor performance within a firm, yet measurement of the end-to-end journey times at product level also helps firms to understand the customer perspective.

We expect firms to continue to challenge their claims practices, service standards and delivery to ensure that appropriate customer outcomes are achieved. Firms should collect and interrogate MI on SLA performance to enable them to detect when service delivery falls below their outcome measures. This will help them to act quickly to mitigate the risk of harm to customers. We consider that there is considerable room for improvement.

We initially wanted to understand whether firms were meeting their own service levels and compare performance across the industry. However, because each firm has different service measures, and due to the variations in the MI we received, making direct comparisons has been difficult.

We did find that most firms sampled experienced periods of time where they were unable to meet some of their own SLAs. Firms also reported extended periods, of up to 12 months in some cases, where several SLAs were not consistently met. Based on the firms’ own MI, it is possible to infer that most firms had delivered a level of service to some of their customers which fell below the firms’ own expectations.

What we expect 

Firms should have clearly defined SLAs that meet reasonable customer expectations across all key journeys. Where firms experience operational challenges that impact service performance, we expect them to act swiftly to ensure that service recovery is managed effectively, customer harm is minimised, and the lessons learned are acted upon.

We said in our Life insurance portfolio letter that we had seen a lack of operational resilience within firms to the detriment of customers; our review confirmed this. We are therefore reiterating the need for firms to have adequate controls and contingency plans in place to manage and recover from operational problems. This applies to services delivered both in-house and those delivered by an outsourcer where the ultimate responsibility for customer outcomes remains with the life insurer.

We asked firms to provide details of any challenges or factors they were experiencing in achieving their own expected service levels. The most common challenges highlighted were:

Resourcing

Almost all firms reported challenges in recruiting and retaining experienced staff, particularly claim assessors. Without this key resource the bereavement claims process can quickly slow down, and delays occur. A combination of people leaving the industry, flexible and remote working arrangements, and a competitive and more transient labour market, have left many firms short of experienced resource.

Good practice

In response, we found firms have reassessed their remuneration packages, introduced training schemes to upskill existing staff and designed new internal career progression programmes. This is a positive response, but it has not fully resolved the short-term pressures. Firms reported that the recruitment and training of new staff on bereavement claim processes can take between 3-6 months, which can extend to 12 months to attain full proficiency.

Requesting documentation

Firms reported that delays in receiving documentation back from customers and third parties, such as Death Certificates, Grant of Probate, Claim Forms and Medical Evidence, often extends the journey time of a bereavement claim.

Good practice

We found that firms have different risk tolerance levels when setting the claim limits that require documental evidence. Some practices observed were:

• use of electronic ‘verification of death’, avoiding the need for claimants to send in Death Certificates
• accepting medical evidence provided by the claimant, avoiding the need to contact medical practitioners
• ‘paperless’ claim journeys for lower risk claims, avoiding the need to complete claim forms
• establishing digital channels to accept documents and using SMS texts to communicate quickly with claimants

What we expect

Under the Consumer Support outcome of the Duty, firms should support customers in realising the benefits of their policy without unreasonable barriers. An example of a barrier could include a complex claims process requiring customers to provide hard copies of all evidence. Although it is up to each firm to decide their risk tolerances for requiring documentation, they should not impose unreasonably restrictive, rigid, or arbitrary administrative requirements on customers that create barriers to them making a claim.

Although we recognise the challenges that firms are experiencing in relation to resourcing, and acknowledge the initiatives being taken to address these, we expect firms to be resourced with sufficient, well-trained staff to service the products they have sold or acquired.

All the firms in our sample provided some additional support to claimants and relatives of the deceased. This was either through pointing them to third-party support services or through support services built into the contracts. This included bereavement counselling and support for estate administration. Access to some of these benefits is limited to customers holding certain product types, and not all benefits are accessible to all customers.

Most firms said they are signed up to a form of ‘funeral pledge’ to help families in instances where they need to pay funeral costs, but the life insurer has not yet been able to pay the claim due to probate not being resolved.

A few firms also told us about the more personal experience for claimants they were providing, such as individual gifts. One firm told us about the use of text analytics so that real-time additional support can be provided.

Good practice

Firms were able to fully articulate the support measures on offer to enable them to respond flexibly to their customers’ needs. We noted the widespread availability of a range of customer service approaches, such as communicating via Braille or audio and using a ‘tell us once’ approach (preventing the need for customers to repeat potentially sensitive information).

What we expect

We do not prescribe which channels of support a firm must offer but, under the Customer Support outcome of the Duty, firms must make sure those channels meet customer needs and should monitor the support they provide.

We expect firms to have evidence of how they are taking practical action to understand the needs of vulnerable customers. We expect firms to make sure their staff have the appropriate skills and capability to respond accordingly. Firms should consider their approach in the context of our guidance for firms on the fair treatment of vulnerable customers (FG 21/1[3]).

Our review suggested considerable positive intent within firms to continuously improve customer outcomes in the bereavement process, and the initiatives observed to do so are welcome. However, there was far less evidence of an urgency to tackle some of the major barriers to making fundamental improvements in customer service and outcomes, such as addressing resourcing constraints and arrangements. 

What we expect

Firms that challenge themselves to overcome the internal and external barriers across the whole, end-to-end bereavement process journey are more likely to achieve better outcomes for their customers. We want to see a step change improvement in consumer outcomes across the industry for the bereavement claims process. We would encourage and support an industry-led effort to reduce and consistently measure claim journey times, and to collectively tackle any common challenges found in the bereavement claims process.

Our expectation is that firms give full consideration to the Consumer Support outcome of the Duty. In the case of a bereavement claim, this means meeting the needs of customers to access quality and timely support particularly when they may be considered to be vulnerable. The service and support provided should be as good as that provided for the sales process.

We would challenge firms to reflect on the service standards they set themselves for bereavement claims, and whether their attainment of these is really enough to result in good outcomes for consumers.