Many UK insurance customers risking claims issues due to disclosure gaps

Many home and motor insurance customers are unclear about what constitutes a material change to their circumstances that they must disclose to their insurers, according to new statistics from market research firm Consumer Intelligence.

The findings – compiled from a survey of 817 motor and 752 home insurance customers in the UK – suggested that while the need for disclosures of high-profile changes such as moving home or changing cars were recognised, other disclosures such as occupational or marital status changes were often disregarded.

The failure to disclose such changes can – depending on the specifics of the policy in question – result in premium adjustments, policy cancellations, implications for future coverage and, at worst, claim denials.

Home insurance disclosures

Among home insurance customers, a change of address was recognised as the most important factor to disclose to an insurer, with 67% of policyholders saying they would inform their insurer, and the remaining 33% saying they either had no intention to do so, or were unsure if they had to.

Consumers were less likely to disclose home improvements they had conducted, with just 37.4% of respondents suggesting they would do so.

Likewise, home ownership changes (35.5%) and occupancy changes (25.3%) had relatively low levels of disclosure intention, despite being factors that insurers specify as being critical to determining levels of cover.

Even lower levels of disclosure intent were reported for changes to marital status (20.1%), and employment, occupational and income changes, all of which received lower than 20% disclosure intention results.

Motor disclosure gaps

Compared to home insurance customers, motor insurance customers reported far higher levels of awareness on what changes they needed to inform their insurers of.

Some 70.6% of policyholders reported that they would disclose a change of vehicle to their insurer and while that number is high, it worryingly suggests that nearly one third of motor customers either wouldn’t, or were unsure if they should, inform their insurer of such a change.

High levels of intent to inform were also reported for changes in circumstances such as the addition of new drivers (65.4%), changing address (64.3%) and vehicle modifications (58.4%).

Consumers were, however, considerably less likely to report additional household vehicles, with just 36.6% reporting that they would do so. Consumers presumably believed that separate cars with separate insurance policies are treated independently, when in fact the household vehicle count is a rating factor used by insurers.

Dashcam installations, a factor which has the potential to reduce insurance premiums, had a relatively low rate of intent-to-inform, at just 35.7%.

Occupation changes (20.8%), employment status changes (19.1%) and marital status changes (14.1%) all had similarly low levels of disclosure intent, while changes to a policyholder’s income (4.9%) was the lowest rated disclosure in the survey.

The wider impact

The potential for non-disclosures to lead to coverage disputes and inflict reputational damage to insurers is high across all insurance lines. Indeed, the Financial Ombudsman Service (FOS) recently highlighted coverage disputes as an area for concern in the pet insurance and travel insurance markets.

Chris Rolland, chief executive at InsurEvo, explained how keeping customers educated and aware of their policy details is a key factor in reducing the chance of customer disputes in the travel insurance industry.

He said: “The number one concern has to be consumers – you’ve got to make sure they’re getting the right product, the right cover and that they’re disclosing all their medical conditions, so that there’s no surprises when it comes to the claims experience.

“That’s about making sure we start with either a really good conversation with a broker or, when the consumer goes online, making sure that we are really clear on what the product is there to look after.

“People are more interested in a product that’s actually going to pay out and that looks after you when things go wrong – that’s what leads to less complaints and, crucially, a better experience for customers.”