There have been more than 200,000 general insurance complaints referred to the Financial Ombudsman Service (FOS) over the last five years, with the number of quarterly referrals rising by almost 25% over that period.
Motor insurance continues to be the most complained about business line, with more than 33,500 complaints referred to the FOS over the five years to the end of June 2023.
This accounts for a third of all general insurance complaints over that period, more than double any other business line.
Indeed, motor insurance has been the most complained about business line across each quarter of the last five years but one, with a Covid-19 hit travel insurance market topping the table in the final quarter of 2020.
The volume of travel insurance complaints almost quadrupled over the course of 2020 in the first year of the pandemic, rising to a high of almost 2,600 in the third quarter of the year before falling back to pre-pandemic levels over subsequent quarters.
Recent quarters, however, have seen a rise in complaints across many business lines and travel is no exception, with travel insurance-related complaints rising to more than 1,000 for the first time since the pandemic in each of the last three quarters of this analysis.
Indeed, travel insurance has seen the biggest year-on-year increase in complaints during Q2 2023, with referrals to the FOS rising by more than 123%.
Motor and home insurance have also seen a big uptick in complaints, with each business line experiencing a 44% year-on-year increase over the second quarter of the year.
This means that motor insurance complaints volumes are now well above pre-pandemic levels, with the first two quarters of the year representing the two highest quarters across the entirety of the last five years.
Across all business lines, complaints referrals rose by 39% over Q2 2023, making it four consecutive quarters of rising volumes – the first sustained period of increased referrals since the pandemic.
The biggest test of complaints performance, however, is not overall volumes of referrals but the proportion that are found in favour of the customer, otherwise known as the upheld rate.
And the bad news for insurers is that this is also on the rise, with all of the five most complained about business lines experiencing an increase in upheld rates in recent quarters.
Of these lines, home emergency cover has the highest upheld rate at 44.0% for the second quarter of 2023, slightly higher than travel insurance at 43.5%.
Worryingly, three of the five most complained about business lines had an upheld rate over this period of 40% or greater, with all five having an upheld rate of more than 30%.
In fact, only three business lines had an upheld rate below 30% in Q2 2023 – business protection insurance (28.0%), legal expenses insurance (22.0%), and private medical and dental insurance (13.8%).
The business line with the highest upheld rate, meanwhile, was special event insurance, with some 55.0% of complaints upheld in favour of the customer.
These rising upheld rates will be of concern to insurers, particularly with the intense regulatory spotlight on customer outcomes following the introduction of the new Consumer Duty and Fair Value regulations.
The FCA has already cited complaints performance as a key metric under Consumer Duty, making monitoring and benchmarking of these measures essential for every insurer.
If you would like to explore how Insurance DataLab can help your business monitor Consumer Duty outcomes then request your free 7-day trial of our market intelligence platform now.
We are also hosting a webinar on the importance of Customer Experience in the Age of Consumer Duty on 5 December at 11am, where we will also discuss the findings of our upcoming Customer Experience research. Register for free here.