Consumer expectations in some personal insurance classes are not being met, according to the Financial Ombudsman Service (FOS).

Its latest report on compliance with the General Insurance Code of Practice notes rising levels of declined claims in consumer credit, personal and domestic property, and travel insurance.

Last financial year the number of consumer credit claims fell 9% to 26,237. Declined claims grew 19% to 3791.

Personal and domestic property claims increased 23% to 441,116, with declined claims up 72% to 32,930.

Travel insurance claims were up 4% to 248,801, and declined claims grew 21% to 24,271.

FOS says this suggests a gap between consumer expectations and how the products work.

“Industry needs to more fully understand the factors that underlie these trends and address those that may act as a barrier to informed decision-making and consumer understanding about the features of the cover held within these classes of personal insurance.”

Across all classes, there were 604 instances of non-compliance in relation to fairness and transparency in the buying and selling of insurance last financial year. Most were due to employees or authorised representatives not following organisational procedures.

FOS recommends vigilance and the fostering of a culture where procedures are “consistently applied”.

The industry reported 3835 breaches of the code’s claims-handling standards.

“The timeliness, fairness and transparency of claims-handling processes and consumer access to key information about their rights when a claim has been declined are extremely important,” the report says.

“The data suggests industry performance in these areas needs to improve.”

During the year more than 45.82 million policies were issued, up 7%, and claims received grew 4% to 3.92 million. Declined claims increased 11% to 110,298.

The report is based on the 2012 version of the code, which will be replaced by an updated version on July 1. From this date the new code governance committee will assume responsibility for publishing industry data.