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."