The FCA has called on insurance firms to improve bereavement handling times and share best practice after it found it took up to 122 days to process a claim.

The regulator said that while life insurers provide good service to bereaved customers, they needed to settle claims quicker and improve how they measure customer experience.

The FCA said firms took, on average, between 53 and 122 days to process a claim, from start to finish, for a term insurance policy.

Group life cover claims were processed within 36 days, while over 50 plans took 20 days, and whole of life to 53 days.

However, measurement is inconsistent as few firms captured these figures, the FCA conceded.

Its multi-firm review found evidence of good practice, such as firms providing additional support for claimants throughout what is a difficult time for them. The FCA said it also recognised firms can face challenges in providing a timely service, such as obtaining the evidence needed to assess a claim.

However, it found that many firms still have further to go to meet its expectations, particularly in the measurement, monitoring, and delivery of good service outcomes for customers. 

In September 2023, the regulator issued a life insurance letter raising a series of concerns about poor customer services being delivered to customers. It highlighted slow transfer and claims settlement times in particular. 

The FCA said it will do further work to understand what changes have been made and will take action if it doesn't see improvements.

Matt Brewis, director of insurance at the FCA, said: “The loss of a loved one can be intensely stressful and we expect firms to offer the right support to help their customers during this difficult time. We expect all life insurers to act on our findings and avoid unnecessary delays with claims.”

Following the introduction of the Consumer Duty in July 2023, firms are required to ensure consumers are at the heart of their business and must act to deliver good outcomes for them. 

The FCA said it decided to look at bereavement claims in the review, as it is a point when customers may have a higher chance of demonstrating characteristics of vulnerability. Life Insurers paid out more 250,000 claims in connection with group and individual protection policies in 2022.

• The review was based on data requested from 15 life insurers, representing more than 75% of the life protection market. The FCA asked firms to set out their customer journeys for life products within four categories: term insurance, group life cover, guaranteed over-50 plans and whole of life insurance.