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6 February 2023

Fairer Finance analyses the details of their latest CX ratings

Read on to find out how the industry is faring on customer satisfaction, trust, complaints handling and transparency

By Oliver Crawford

Fairer Finance published its most recent customer experience ratings in autumn 2022. These ratings are based on polling customers to see how satisfied they are with their insurer and how much they trust them.

They also take into account how insurers fare with complaints referred to the Financial Ombudsman Service (FOS) and how transparent providers are in their purchase journeys and policy documents.

Between spring and autumn 2022 Fairer Finance’s polling showed that customer satisfaction rose, on average, for car insurance providers and fell slightly for home and travel insurers.

There was a more pronounced fall in customer happiness for pet insurers. This may be due to customers who bought pets during 2020 – when there was a rise in pet ownership – starting to pay higher premiums as their pets age. 

Since 2020, there has been a fairly stable hierarchy of insurance sectors when it comes to customer satisfaction: car insurance at the top, followed by home, then pet – with travel lagging behind the rest.

When it comes to claiming on insurance, Fairer Finance data shows that customers tend to be somewhat more satisfied with their experience of making a claim than they are with their insurer overall. 

In sectors where the vast majority of claims are accepted, such as car insurance, claims satisfaction rates are higher, but in sectors where more claims are rejected, such as home insurance, claims satisfaction rates are lower.

Customer trust – which has been on a long upward trend since 2015 – followed a similar pattern to customer satisfaction in autumn 2022.

Car insurers were the most trusted on average, then home insurers, followed by pet insurers, with travel insurers a long way behind. As with customer happiness, there was a decline in trust in pet insurers between spring and autumn 2022.

Insurers’ performance on complaints was fairly steady between spring and autumn 2022.

According to FOS data, in H1 2022 there were 17,530 complaints regarding insurance and protection referred to the Ombudsman, an increase of 2,574 from H2 2021. Despite the absolute increase in complaints, however, the uphold rate for insurance complaints fell slightly between H2 2021 and H1 2022, from 30% to 28%.

What do insurers need to do to improve their ratings?

Fairer Finance’s polling shows that the main drivers of customer satisfaction in insurance are:

  • Cost
  • Level of cover
  • Customer service
  • Ease of managing policies
  • The brand’s reputation

This suggests that providers should focus on these areas to improve their customer satisfaction scores.

There is also room for improvement when it comes to transparency.

Fairer Finance grades providers on the clarity of their purchase journeys and policy documents, giving a percentage score based on how they perform against Fairer Finance’s own transparency methodology.

The average purchase journey score in insurance was 69% in autumn 2022, while the average policy document score was 61%. Providers can rise in the customer experience league tables, then, by improving how they signpost and explain key information on their websites and in their policy documents.

How might regulation impact the customer experience offered by insurers?

The biggest development in the regulation landscape for insurers is the FCA’s Consumer Duty, which begins to come into force in July 2023.

The Duty’s emphasis on consumer understanding will hopefully lead to insurers improving how important information is displayed in purchase journeys and documents, which should translate into better transparency scores.

The Duty’s rules around price and value should also hopefully lead to higher customer satisfaction, since Fairer Finance’s polling shows that consumers value fair pricing in insurance. 

Fairer Finance’s data reveals that most insurance customers feel they are getting either ‘good value’ or ‘excellent value’ from their insurer.

There is, nonetheless, space for insurers to improve, both because some providers poll much better than others on value for money, and because a minority of customers feel they are getting ‘poor’ or ‘terrible’ value from their insurance. 

It will be interesting to see whether changes implemented to meet the FCA’s fair value requirements result in more customers saying they are receiving ‘excellent value’ or ‘good value’ for their insurer - a trend that Fairer Finance will monitor through its polling.

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