Big insurer to issue compensation to drivers after underpaying claims for years – do you need to claim?

A BIG insurance firm has been ordered to issue compensation to drivers by the financial regulator.

Direct Line has been told to reassess five years’ worth of motor insurance claims after admitting that it underpaid some customers.

The Financial Conduct Authority (FCA), which regulates the insurance industry, has issued the firm with a voluntary application for imposition of requirement (VREP).

Direct Line is now reviewing all write-off claims settled between September 1 2017, and August 17 2022.

The company which has five million customers will help identify any of those with car insurance who received an unfair settlement during this period.

The firm has said that customers don’t need to take any action and anyone affected will be contacted directly.

Affected customers will receive compensation plus interest but the firm hasn’t confirmed when this will be paid.

A Direct Line Group spokesperson said: “We expect that this will affect a minority of customers and the vast majority of customers will not be impacted. 

“Customers do not need to contact us, either directly or via third parties, as we will contact impacted individuals to apologise and provide appropriate redress, including interest.”

It comes after the FCA warned insurers not to undervalue cars when settling claims back in December.

The regulator claimed that it had seen evidence that some consumers who had their cars written off after an accident were being offered a price lower than the vehicle’s fair market value. 

In some cases, claims staff are only increasing that offer to the fair market price when a consumer complains. 

Offering a price lower than fair market value is not allowed under FCA rules. The FCA is acting against those firms that it has found breaking its rules.  

A spokesperson for the FCA told The Sun: “We will continue to engage with firms to make sure that customers get a fair deal.”

Those who don’t have a product with Direct Line and who think that their claim with another provider has been undervalued should formally complain.

How do you complain about insurance claims?

Insurers are required to have a written complaints process that tells helps customers how to make a complaint.

You should be able to find the information on their website but if you don’t, ask them to send it to you.

It’s worth making your complaint as soon as possible, as it’ll be easier to remember all the relevant details to strengthen your case.

Then simply follow each stage of the process, and submit as much evidence as you can.

Once you’ve sent in your complaint, the firm needs to give you a response within eight weeks.

If you don’t get a response within eight weeks or you’re not happy with the one you do get, you can take your complaint to the free .

How do I take your complaint to the Financial Ombudsman?

If you decide to take your complaint to the Financial Ombudsman (FOS), keep in mind you must typically do so within six months of your provider’s final response.

To get in touch, you need to fill in a form, which you can find on the FOS website.

If you’d prefer to talk it through with someone, the FOS can help you do this if you call 0800 023 4567.

When you get in touch, you need to have the following details to hand:

• Some basic information, including your name and address
• What the problem is, and how you want things put right
• Details such as the policy number or account number that your complaint relates to

The FOS will then look at the evidence provided by both sides, and it may contact you for more information.

Once it’s made a decision, it’ll write to you and if it agrees with your complaint, it’ll say what your insurance firm must do to put things right.

If all else fails and you still think you’re entitled to compensation you can try taking your insurer to the small claims court – but this comes with a substantial cost.