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Insurance reform should be judged at the moment a policyholder needs the contract to work. Distribution costs affect premiums and insurer efficiency, but claims handling determines whether promised protection arrives on time, in the right amount, with reasons the customer can understand. Evidence from European supervisors shows claims-handling complaints dominate consumer grievances, while delays and lower-than-expected settlements remain widespread. That makes claim assessment times, payment adequacy, explanations and appeal routes more important reform outcomes than a headline reduction in broker or acquisition expenses. Distribution reforms still matter, especially where commissions encourage unsuitable add-ons, but savings have no consumer value if a claim is delayed, reduced without a clear explanation or rejected through an opaque process.
Why do claims matter more than distribution costs?
A policy is a promise, and the claim is the test of that promise. Lower commission, advertising or intermediary costs may improve an insurer’s expense ratio, yet they do not show that a household is better protected. A timely assessment, a fair settlement and a usable complaint route are outcomes policyholders can actually experience.
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Claims also expose failures that sales metrics can hide. A product can be sold quickly and cheaply while still producing long waits, confusing exclusions or underpayments. The European Insurance and Occupational Pensions Authority (EIOPA) says persistent post-sale shortcomings remain in some markets, including “very long claims processing times.”
The case for prioritising claims is a policy judgment, not a proven cross-country calculation of the precise return from one reform versus another. The available evidence does not isolate the welfare effect of cutting distribution costs and compare it directly with improving claims service. It does, however, show that claims problems are frequent, measurable and central to whether insurance delivers its purpose.
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What do the latest data show about claims outcomes?
The strongest indicators concern complaints, delays and payment adequacy. EIOPA’s 2022 evidence and the OECD’s 2024 market data point to a system under pressure from both service problems and rising loss costs.
| Indicator | Finding | What it means for reform |
|---|---|---|
| Claims-related complaints | 52% of complaints received and managed by insurance undertakings, and 52% of complaints received by alternative-dispute-resolution bodies or national competent authorities, concerned claims handling (EIOPA, 2022). | Claims service should be a primary supervisory outcome, not a secondary customer-service issue. |
| Assessment delays | In four Member States, more than 10% of consumers said claims took a long time to assess (EIOPA, 2022). | Supervisors need comparable cycle-time measures and scrutiny of backlogs. |
| Payment adequacy | In five Member States, more than 10% said they received less than expected (EIOPA, 2022). | Reform must test settlement adequacy and explanations, not only speed. |
| Gross non-life claims payments | Payments grew about 17% on average across 49 jurisdictions in 2023; real growth was 10.1% after inflation (OECD, 2024). | Higher claims outgo can reflect genuine loss-cost pressure rather than administrative waste. |
| Non-life premiums | Premiums grew 12.4% on average in nominal terms in 2023, as insurers responded to claims-cost inflation and harder reinsurance markets (OECD, 2024). | Cutting distribution expense alone cannot resolve pricing pressure caused by losses and reinsurance. |
These figures do not mean every insurer handles claims poorly. They show why regulators should track outcomes across firms and markets instead of assuming that a cheaper sales channel automatically produces better value.
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How can distribution incentives reduce insurance value?
Distribution determines how a product is presented, who receives advice and what incentives shape the sale. EIOPA identifies inducements, conflicts of interest, cross-selling and weak suitability practices as continuing consumer-protection risks.
In EIOPA’s 2022 consumer data, 22% reported being forced to buy broad or add-on coverage despite requesting or needing simple coverage. An apparently low-cost sales process can therefore increase the amount a customer buys without improving the cover that matters. Commissions may also reward volume or add-ons even when a simpler policy better matches the customer’s need.
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That does not make every commission unlawful or every intermediary unnecessary. It means reform should ask who benefits from an inducement, whether the product is suitable, and whether any efficiency saving reaches the policyholder. EIOPA’s 2026 Third IDD report says misaligned incentives and insufficient transparency remain threats in some markets; some national authorities are considering commission bans or stronger disclosure.
Which reforms improve claims outcomes?
Claims-focused reform should combine measurable standards with fair treatment and a route to human review.
Publish and supervise outcome metrics
- Claim-assessment and settlement times, separated by product and claim type.
- Closure rates, reopened claims and the share of claims awaiting information.
- Payment adequacy indicators, denial and reversal rates, and complaint escalation outcomes.
- Results for vulnerable customers and people who cannot use digital channels easily.
Publishing these measures lets supervisors identify persistent underperformance instead of relying on premium or expense data alone.
Explain partial payments and denials in plain language
A customer should receive the factual basis for a partial settlement or rejection, the policy wording relied on, what evidence is missing and how to challenge the decision. Explanations should be accessible, with a human escalation route for vulnerable or digitally excluded policyholders.
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Test automation against fairness as well as speed
Automated triage and generative-AI tools may reduce routine handling time, but they need accuracy checks, audit trails, supervisory access and appeal rights. A faster process that systematically misclassifies losses or makes explanations incomprehensible is not a successful reform.
Align sales incentives with suitability
Review commissions and other inducements where they drive add-on sales or unsuitable products. Options include clearer disclosure, restrictions on conflicted remuneration or bans in specific markets, but each option should be tested for effects on access, advice quality and protection gaps.
How should policymakers compare reform options?
A credible comparison looks beyond the headline expense saving. The following framework keeps the consumer outcome visible while identifying who bears the cost.
| Question | What to measure |
|---|---|
| Outcome | Assessment time, payment adequacy, denial and reversal rates, complaint volume and customer understanding. |
| Equity | Effects on vulnerable people, those with limited digital literacy and households exposed to catastrophe risks. |
| Cost incidence | Whether insurers, intermediaries, regulators or consumers pay, and whether savings are passed through. |
| Incentives | Changes to commissions, cross-selling, product design, reserving and claims automation. |
| Accountability | Audit trails, supervisory access, appeal rights and a clear division of responsibility between insurer and distributor. |
This approach prevents a reform from being labelled successful merely because it reduces a distribution line item. It also recognises that a claims standard can impose administrative costs while still producing greater value if it reduces avoidable delay and disputes.
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Can digital claims automation help without creating new harm?
Yes, but only when efficiency is paired with controls. EIOPA reports growing use of digital and generative-AI tools and warns that digitalisation can coexist with consumer harm when processes are inaccessible or inadequately supervised.
Supervisors should require records showing how an automated decision was reached, monitor error and reversal patterns, and preserve a meaningful human review. Customers need non-digital options where automation would otherwise exclude them. Testing should cover not only average processing time but also comprehension, fairness and outcomes for people whose claims are complex or poorly documented.
What does a claims-first reform agenda mean for policyholders?
For consumers, the practical test is whether an insurer can explain what happens after a loss. Clear time expectations, evidence requirements, reasons for decisions and escalation contacts matter more than a promise that the product was sold cheaply. A low distribution cost is valuable only if it is reflected in a suitable policy, a competitive price or better service.
For regulators, the priority is to make those service outcomes visible and enforceable. For insurers and distributors, it means treating claims data, complaints and reopened files as indicators of product value rather than as separate operational statistics.
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Why did EIOPA question longer sales sessions?
EIOPA’s 2026 IDD report found that longer and more detailed sales sessions did not translate into better outcomes for shoppers, suggesting that simplifying the sales process may sometimes help. The lesson is not to remove information, but to make key costs, exclusions, suitability judgments and post-sale rights easier to understand.
Sales reform should therefore be judged by customer comprehension and suitability, then connected to what happens at claim time. A detailed presentation that leads to an unsuitable add-on is not better protection.
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Do rising claims payments prove that insurers are overpaying?
No. Higher payments can reflect inflation, larger insured exposures, catastrophe losses or other genuine changes in claims costs. OECD’s 2023 figures distinguish nominal growth of about 17% from real growth of 10.1%, which is why payment growth must be interpreted alongside loss trends and prices.
How can I assess a claims process before buying a policy?
Look for stated notification deadlines, evidence requirements, expected communication channels and a clearly identified complaints route. Policies that explain exclusions and escalation steps in plain language are easier to use when a loss occurs.
Could banning commissions make insurance harder to obtain?
It could change how advice and distribution are funded, so access and protection-gap effects need monitoring. A commission restriction should be assessed against suitability, availability of advice and whether customers actually receive lower prices or better cover.
What should I do if a claim is reduced or rejected?
Request the decision and the policy wording relied on in writing, then use the insurer’s internal complaint process. If the issue is not resolved, an alternative-dispute-resolution body or national competent authority may provide an escalation route, depending on the jurisdiction.
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