Trust and retention directly depend on customer satisfaction in the field of insurance. Complaints, however, continue to be a big problem and some insurers have been criticised more than others. In this article we look at what the latest figures tell us about insurance complaints in the UK and the key reasons why they are occurring.
Insurance Complaints in UK: An overview.
The UK insurance sector displayed mixed progress and persistent challenges according to analysis of FCA complaints data by Insurance DataLab for the first half of 2024, the data shows. The overall number of complaints fell by 4.2% compared to 2023, but some companies and sectors soared. The industry average complaint rate so far, 4.59 complaints per 1,000 policies, is slightly higher than 4.28 a year ago.
Insurance Companies People Complainted the Most About
The report highlights specific insurers with complaint rates significantly above the industry average:
Axa PPP Healthcare
Complaints per 1,000 policies: 36.75
Not only does it outperform the average rate, this health insurer is number one. Yet, many upheld rates were relatively low (47.99%), which may indicate that many complaints did not follow policy terms.
Unum
Complaints per 1,000 policies: 19.12
Unum, as another health insurer, ranked second in complaints showing continuing problems in the health insurance industry.
Saga Services
Complaints per 1,000 policies: 10.65
Bupa Insurance was just ahead of this insurer, which enjoys a niche market of older demos, with 10.08 complaints coming in per 1,000 policies.
British Gas Services
Complaints per 1,000 policies: 9.94
Even as a utility focused insurer, the complaints rate remains unacceptable.
Other recognised companies, such as Axa Insurance UK and Direct Line Group, reported complaints rates of 9.45 and 5.51 respectively.
Best Performing Insurers
Some insurers didn’t do as well. Allianz Insurance was one of the top performing insurers among the largest by gross written premium (GWP), with only 0.69 complaints per 1,000 policies. AIG UK had a complaints rate of 0.86 which is low placing it in similar territory to many UK issuers, indicating the potential for effective customer service and complaint resolution practices.
Factors causing high complaint rates
The surge in complaints for certain insurers, particularly health insurance providers, can be attributed to:
Policy Complexity: Our customers struggle to understand what is and isn’t covered by health insurance policies.
Slow Claims Processing: Dissatisfaction is set deeply in a delay in claims settlement.
Lack of Transparency: Misaligned expectations come from confusing terms and conditions.
Trends Across Product Lines
The analysis also revealed trends across various insurance product lines:
Motor Insurance
H1 2024 most complained about product: Accounting 276,794 complaints.
While complaints actually decreased slightly, by 0.4%, redress payments continued to be very significant.
Health Insurance
Second most complained about out of the 40 sectors, with complaints up 12.4 per cent to 95,886.
Persistent problems in the sector have lead to this increase.
Travel Insurance
Complaints dropped to 27,544, down 11.9 percent from the previous quarter, which was near pre-pandemic levels.
Redress Payments and Upheld Rate
While complaints are a crucial metric, the upheld rates (proportion of complaints resolved in favor of the customer) provide deeper insights:
The highest upheld rate was UK Insurance, which had 70.29%, with NFU Mutual, 62.51%.
In contrast: Axa PPP Healthcare and Liverpool Victoria had the lowest upheld rates, less than 50 per cent suggesting greater clarity or fewer valid complaints.
The average redress payments rose to £81.42 in H1 2024 from £76.33 in 2023, with health and property insurance making up a big chunk of those, rising to £532 million and £405 million respectively.
How Insurers Can Improve
Addressing the high complaint volumes requires a two-pronged approach:
Proactive Customer Education
Before purchasing, you can simplify policy language, and clearly explain exclusions to avoid misunderstandings.
Customer satisfaction will improve when you provide educational resources for each customer’s needs.
Streamlining Claims Processes
Claims handling can be faster and more transparent which could improve customer experience and decrease dissatisfaction.
Enhancing Digital Support
With the power of AI fueled chatbots and self service portals policy management becomes smoother and problems are resolved faster.
Final Thoughts
What they found also highlights huge gaps in how insurance companies respond to customer complaints. Some insurers like Allianz Insurance are an example of best practice, while others in the health sector are experiencing problems beyond the usual ones. By being transparent, educating the customer, and handling claims more efficiently, insurers can lower complaint volumes, build trust and have their reputation.
In the end, these issues are solved benefiting the industry as well as its customers and their win is a win for all.
