Consumers’ trust in insurers has fallen to an all-time low, as prices skyrocket for millions of people across the UK, according to Which?
Which?’s monthly Consumer Insight Tracker found that trust in the insurance industry has dropped to a confidence score of -24.
Just a fifth of consumers said they trust insurance companies to act in their best interest while almost half (44%) said they do not. This is the lowest trust level recorded for the sector since Which? began tracking it in August 2020.
The consumer champion uncovered several reasons why trust in the insurance industry may have plummeted, including rising premiums, particularly for car insurance.
According to Confused.com, the cost of car insurance went up by almost 60% in the year to October 2023. The average cost of a comprehensive car insurance policy is now £924, an increase of £338 over the past year.
Claims and customer welfare
Which? found that many individuals who distrust the insurance industry also believe firms are prioritising profit over customer welfare. Others had bad experiences when making a claim.
Of 34 insurance types the Financial Conduct Authority (FCA) publishes data on, standalone buildings and contents cover are among the five products least likely to pay claims.
During 2022, some 99% of car insurance claims were accepted. But the figure was just 68% for standalone buildings cover, which covers life-changing events like fire or flood.
Earlier this year, the FCA introduced a new “Consumer Duty” with a set of higher and clearer standards of consumer protections which require businesses to put their customers’ needs first.
Insurers need to ensure they are offering value for money and support their customers’ understanding, including when they need to make a claim.
Could you switch or haggle?
Rocio Concha, Which? director of policy and advocacy, said: “With insurance premiums continuing to soar and many consumers reporting bad experiences with their insurer, it’s hardly surprising that trust in the industry has continued to fall.
“Insurers need to ensure they are offering value for money and that their customer service is up to scratch when you need to make a claim. The FCA should not hesitate to take action against any firms falling short.
“Anyone who isn’t happy with their current insurer should consider switching or haggling. Our research shows the price quoted by your insurer isn’t necessarily the best price available and doing your research on comparison sites, haggling and switching can offer savings.”
