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The UK’s financial regulator has warned insurers not to underestimate cars and other property when it comes to paying customers.
The Financial Conduct Authority said on Friday it had seen evidence that customers whose cars were written off in crashes were being offered lower payments than the vehicle’s fair market value – and in some cases increasing the offer only when the customer complained.
The insurance industry has been battling inflationary claims due to rising prices of vehicles and parts cutting into their profit margins. The regulator acknowledged that insurers are under “increasing pressure”, but warned that they should consider the impact of inflation when they offer cash settlements.
“When making an insurance claim, people don’t need to question whether they’re being offered the right amount for their written-off car or other item they need replaced,” said Sheldon Mills, executive director of the watchdog for consumers and competition. . “This is especially important now because people struggling with the cost of living will have a hit in their pockets at a certain point when they can’t afford it.”
The regulator will “act swiftly to stop firms and prevent harm to consumers” where it detects such activity, he said.
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