Misrepresentation, Non-Disclosure and Breach ... - Law Commission

Section 4 Baseline analysis of insurance markets and the extent of non-disclosure
Figure 2: Number of complaints to the Financial Ombudsman by insurance
product, 2006
Number of complaints brought to the Financial Ombudsman by
type, 2006
Income Protection ,
1,103
Pet Insurance, 222
Critical Illness, 799
Household
Appliances, 543
Non Package
Holiday/ Other travel
Insurance, 1,787
Legal Expenses,
395
Medical Insurance
Premiums, 389
Personal Accident,
172
Contents, 1,224
Vehicle Insurance,
3,372
Structural, 1,951
The volume of complaints brought to the Financial Ombudsman is essentially
independent of the size of the particular market in question. For instance,
motor insurance is the largest general insurance market and accounts for
between £9.5bn and £12.0bn of annual household expenditure/net written
premiums but only 3,372 FOS complaints. Building and contents insurance
account for almost £10bn of net written premiums in the insurance market
but less than 3,200 complaints to the FOS annually. At the other extreme,
income protection policies (which include income protection and critical
illness insurance) account for only £0.184 billion of net premiums written yet
produce more than 1,800 complaints to the FOS annually.
This does not imply that these complaints brought to the FOS are all for
reasons of non-disclosure; however, it is clear that consumers are
disproportionately aggrieved with the decisions made by insurance
companies in areas of critical illness and income protection for whatever
reason.
In Table 10 overleaf, we present some information on the number of
complaints specifically relating to non-disclosure in the insurance market and
combine this information with data on the size of particular market. The
information from the FOS relates to January to September 2005 – so we have
annualised the number of claims to reflect the expected number of complaints
in a full year. We have transposed the information from the Food and
Expenditure Survey presented in Table 7 to illustrate the size of the markets.
London Economics
June 2007 24