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11 July 2023

FOS Complaints Figures a Worrying Sign for Insurers Ahead of Consumer Duty Deadline 

More than one in three complaints were upheld in favour of the customer in the first three months of 2023

The latest figures from the Financial Ombudsman Service (FOS) reveal a bleak picture for complaints handling in the insurance industry, with analysis by Insurance DataLab revealing that many lines of business have increasingly high upheld rates. 

The worst performer is special event insurance, with some 57% of complaints upheld by the FOS in Q1 2023. 

This means that the ombudsman found insurers made the wrong decision in more than half of all cases closed over that period, and it represents an increase of 18 percentage points on the same period in 2022. 

Building warranties, meanwhile, had the second highest upheld rate, with the FOS finding in favour of the customer in 44% of complaints – an increase of 17 percentage points on Q1 2022. 

It is worth noting, however, that both special event insurance and building warranties had low levels of complaints, with the FOS receiving 35 and 78 complaints about these respective product lines in Q1 2023. 

That is not the case for the business line with the third highest upheld rate, however. 

Travel insurance was the third most complained about business line of Q1 2023, with the product having a total of 1,426 complaints referred to the ombudsman, and it also had the third highest upheld rate at 43%. This compares to an upheld rate of 33% for the first three months of 2022, an increase of 10 percentage points. 

The two other product lines to receive more than 1,000 complaints over the first three months of the year were car and motorcycle insurance with 4,221 complaints, and buildings insurance with 1,805. 

And both business lines also reported a high upheld rate over the quarter, with 33% of complaints about car and motorcycle insurance (Q1 2022: 27%) and 39% about buildings insurance (Q1 2022: 31%) found in favour of the customer. 

Indeed, of all the general insurance products covered by this analysis, only gadget insurance reported an improved upheld rate over the first quarter of 2023, with the FOS finding in favour of the customer in 34% of cases, compared to 31% for Q1 2022. 

This should make for worrying reading for insurers, especially with the Consumer Duty implementation deadline looming large on the horizon – having more than a third of complaints upheld in favour of the customer does not exactly scream Fair Value. 

And with the FCA stating that it will be looking for outliers in such data when it comes to monitoring performance post-implementation, those firms finding themselves at the wrong end of the market could well find themselves facing regulatory action if upheld rates stay so high. 

Business Line Q1 2023 Upheld Rate 
Special Event Insurance 57.00% 
Building Warranties 44.00% 
Travel Insurance 43.00% 
Home Emergency Insurance 40.00% 
Household Warranties 40.00% 
Buildings Insurance 39.00% 
Business Protection Insurance 38.00% 
Roadside Assistance Insurance 38.00% 
Commercial Property Insurance 37.00% 
Gadget Insurance 34.00% 
Mobile Phone Insurance 34.00% 
Pets and Livestock Insurance 34.00% 
Car/Motorcycle Insurance 33.80% 
Legal Expenses Insurance 33.00% 
Home Insurance 28.00% 
Private Medical/Dental Insurance 20.00% 
Personal Accident Insurance 17.00% 

Insurance DataLab works with insurance companies to help benchmark performance across 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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© Insurance DataLab 2023. Insurance DataLab is owned and operated by MAD Financial Media Limited, registered in England and Wales under company number 12418752.
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