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11 April 2023

Motor Most Complained About Insurance Product as Complaints Return to Pre-Pandemic Levels

Latest figures should be worrying news for the insurance industry as Consumer Duty deadline looms

Complaints about car/motorcycle insurance accounted for one third of all general insurance (GI) complaints referred to the Financial Ombudsman Service (FOS) over the last five years, according to our latest analysis of FOS complaints handling figures.

This equates to more than 55,250 complaints about the product line out of a total of almost 170,000 for the GI market as a whole.

The volume of complaints about motor insurance products have also been on the rise, with the FOS receiving almost 3,800 motor complaints in the final three months of 2022 – the highest quarterly complaints volume since Q4 2018 and a 49% year-on-year increase.

Indeed, overall complaints volumes rose to more than 8,700 for the final quarter of 2022, an increase of a third on the same period the previous year.

The second most complained about product line was buildings insurance, accounting for some 16% of ombudsman complaints over the last five years after. 

Other product lines receiving large volumes of complaints over this period include travel insurance (12%), home emergency insurance (7%) and home insurance (5%).

Despite being the most complained about business line, car/motorcycle insurance fared better than the market average for the proportion of complaints upheld in favour of the customer with an upheld rate of 26.7% over the last five years.

This compares to an average of 30.0% across all GI product lines.

Special event insurance had the highest upheld rate of all GI products, with the FOS finding in favour of the customer in 53.3% of all cases – some 23.3 percentage points above the industry average.

These figures should be worrying news for the insurance industry, especially with the regulatory spotlight shining so brightly on insurers as they grapple with implementing Consumer Duty.

The regulator has already highlighted complaints figures as an area insurers should be looking at when analysing customer outcomes as part of their Consumer Duty monitoring, and our figures reveal a wide range of results – particularly when it comes to upheld rates.

The best performers in the market can have upheld rates as low as 10.5%. But at the other end of the market, we are seeing a number of insurers with more than 30% or even 40% of complaints being upheld in favour of the customer – this is clearly not good enough, and with Consumer Duty coming into force this July, insurers need to act fast to remedy this issue.

Insurance DataLab works with insurers to help them understand their market position on everything from underwriting and solvency levels to customer experience and complaints handling.

It’s insight platform also includes a number of metrics that help with monitoring performance under Consumer Duty. Apply for a free trial now.

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