The latest FCA complaints data has revealed an alarming picture for motor insurers with complaints rising by almost a fifth (18.2%) over the last year.
Customers made more than 280,000 complaints about motor insurance over the second half of 2023, up from a little under 240,000 for the same period a year earlier.
This means that there have been more than 2.5 million complaints made about the product over the last five years, making it by far the most complained about business line in UKGI.
To give context, the second most complained about product line over that period was property insurance, which received just under one million complaints.
Other product lines receiving a high level of complaints include medical/health insurance, warranties and assistance products.
The scale of the problem is made even clearer when you look at the amount of redress paid out to rectify these complaints, with insurers paying out almost £580m for motor complaints over the last five years.
Upheld Rate Falls
When it comes to complaints, it is also important to look at the upheld rate – the proportion of cases which are found in favour of this customer.
And across all business lines this figure has been falling in recent months following a spike in the upheld rate in the wake of the Covid-19 pandemic.
Indeed, insurers upheld around 58% of cases over the second half of 2023, down from a high of 67% over the first half of 2022.
It is important to remember, however, that these figures relate to internal complaints handled by the insurer, and when complaints are not upheld there are many that will be referred to the Financial Ombudsman Service (FOS).
And the volume of complaints referred to the FOS have been on the increase in recent years – as has the proportion of complaints being upheld by the ombudsman.
So while a falling upheld rate in the FCA figures may appear to be a positive for the industry, it may just be masking a wider problem if these decisions are later overturned by the ombudsman.
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