When I presented evidence to the House of Lords Financial Services Regulation Committee this month, one theme came up repeatedly: consumers often don’t understand what they have bought until they need to make a claim.
The committee’s inquiry into the regulation of the consumer insurance market explored concerns around home and travel insurance claims, the role of Consumer Duty, and whether regulation is delivering better outcomes for policyholders.
Throughout the session, there was a theme from committee members that more regulation may be needed to help improve customer outcomes in a market where claims acceptance rates for home insurance can be as low as 45% with some insurers.
But I argued that many of the challenges facing the market are unlikely to be solved through additional regulation and instead stem from a lack of transparency and understanding.
For an industry that exists to provide certainty when things go wrong, that should give everyone pause for thought.
Readers can watch the full evidence session here. The recording also includes the subsequent session with KPMG partner Matt Brewis, who was previously the director of insurance at the FCA, who gave evidence to the committee immediately afterwards.
The information gap
One of the most striking aspects of my session was the discussion around claims acceptance rates.
While consumers can easily compare policies on price through comparison websites and other channels, far less information is available about what happens when those policies are actually used.
Claims acceptance rates, complaints data, claims handling performance and customer outcomes are often difficult for consumers, brokers and even insurers themselves to compare in a consistent way.
As I told the committee, insurance remains a highly technical product. Many consumers discover exclusions, limitations or policy conditions only when they attempt to make a claim.
That creates frustration for customers and reputational challenges for insurers.
Why outcomes matter
The debate around Consumer Duty often focuses on processes, reporting requirements and regulatory obligations. But ultimately, outcomes are what matter.
- Are claims being paid?
- How quickly are they being settled?
- Are customers receiving the service they expected when they purchased the policy?
These questions are increasingly important as insurers seek to demonstrate fair value and evidence good customer outcomes.
The challenge is that much of the data required to answer those questions sits across multiple sources and is often difficult to compare consistently.
Without a clear framework, identifying best practice – and areas for improvement – becomes significantly more difficult.
Turning data into action
This is where independent performance benchmarking can play an important role.
We launched Insurance DataLab to help improve transparency across the market by providing access to credible, comparable and digestible data on the performance of insurance companies.
Our aim has always been to help the industry move beyond anecdotal evidence and isolated metrics by providing a consistent view of insurer performance.
Our latest innovation on this front is the Insurance DataLab Insurer Performance Index, which combines multiple indicators of performance, including claims outcomes, complaints data, underwriting results and financial strength measures, helping insurers, brokers and other stakeholders understand how companies compare against their peers.
By bringing these metrics together into a single framework, the platform enables users to identify strengths, weaknesses and emerging trends more easily than relying on disparate data sources.
For insurers, that creates an opportunity not only to benchmark performance but also to demonstrate the value they deliver to customers.
Looking ahead
The House of Lords inquiry is likely to continue examining whether the current regulatory framework is delivering the outcomes consumers expect.
While there will undoubtedly be ongoing debate about whether additional regulation is required, there appears to be growing consensus around one point: better information leads to better decisions.
For consumers, that means greater clarity around what is and isn’t covered. For brokers, it means better visibility of insurer performance. And for insurers, it means understanding how they compare against the wider market and identifying opportunities to improve.
The industry already has access to vast amounts of data. The challenge is turning that information into insight.
As the committee’s discussions demonstrated, improving transparency and understanding may be one of the most effective ways of strengthening trust in insurance – and ultimately delivering better outcomes for everyone involved.
How Insurance DataLab can help
Insurance DataLab provides independent benchmarking across UKGI, helping firms assess claims performance, complaints trends, underwriting results and customer outcomes against both individual competitors and the wider market.
Whether insurers are reviewing claims performance, testing fair value obligations, assessing distribution strategies or strengthening board reporting under the Consumer Duty, independent benchmarking provides the external perspective regulators increasingly expect.
If you would like to see how the platform can support your regulatory and operational strategy, you can request a demo here.