Our latest analysis of Financial Ombudsman Service (FOS) complaints figures has revealed some worrying statistics for the insurance industry, with some 189,281 complaints reaching the ombudsman over the five years to the end of June 2024.
Complaints reached a quarterly high of almost 12,000 in the first quarter of 2023, a 41% increase on the same period a year earlier, before falling back slightly to just under 11,000 for the second quarter of 2024 – some 3% lower than Q2 2023.But complaint volumes still comfortably exceed those seen immediately before and after the Covid-19 pandemic and have remained above 10,000 a quarter since the final quarter of 2022.
Motor insurance remains the most complained about business line in UKGI, accounting for almost a third of overall complaints referred to the FOS, with almost 60,000 complaints about the product over the last five years.
The product line has seen a significant increase in complaints in recent quarters, with volumes exceeding 4,000 in three of the last four quarters, while year-on-year growth exceeded 50% in both Q1 and Q2 2023.
And while complaints volumes remained level in Q2 2024 compared to the same period a year earlier, this followed eight consecutive quarters of year-on-year increases.Buildings insurance is the second most complained about business line of the last five years with almost 30,000 complaints, followed by travel insurance (21,407), home emergency insurance (11,733), and home insurance (8,186).
When it comes to upheld rates – the proportion of complaints in which the FOS finds in favour of the customer – travel insurance leads the way as the worst performing business line for those that have received more than 5,000 complaints over the last five years, with an upheld rate of 39%.
Of the top 10 most complained about business lines, eight have an upheld rate of greater than 25%.
This highlights ongoing challenges in resolving customer complaints effectively. High upheld rates often reflect systemic issues, such as poor communication or slow claims handling, which could have broader implications for consumer trust and regulatory oversight.
And this is particularly concerning in light of Consumer Duty, which places a renewed emphasis on delivering good customer outcomes and demonstrating fair value. High upheld rates and complaint volumes suggest that many insurers are struggling to meet expectations, facing not only reputational damage but also increased regulatory scrutiny if improvements are not forthcoming.
And this underscores a critical challenge for the industry – effectively delivering on customer expectations while managing complaints more effectively. Leveraging data-driven insights can help insurers identify trends, address root causes of dissatisfaction, and enhance customer experience.
Insurance DataLab’s market intelligence platform offers deep insights into the complaints handling performance of insurers, breaking down FOS complaints volumes and upheld rates by company, business line, and type of complaint, and on internal company complaints performance from the FCA. Register for your free trial here.