Opinion: Personal motor market continues to be messy

By Katie Scott

Following the heady claim-less years of the Covid-19 pandemic, the personal motor insurance market has been forced back to Earth with a bump.

It has subsequently grappled with the FCA’s fair value reform and the elimination of the loyalty penalty, supply chain and parts challenges stirred up by Brexit, an unexpected war between Russia and Ukraine and post-pandemic hangovers, high inflation and – more recently – the regulator’s magnifying glass homing in on guaranteed asset protection insurance.

While personal lines insurers spin these myriad plates, consumers have let their dissatisfaction with this business line be known – exclusive analysis from Insurance DataLab revealed that one-third of all insurance complaints referred to the Financial Ombudsman Service over the last five years concerned motor insurance, making it the most complained about UKGI product.

However, can motor insurance customers really slide the full blame for ropey service onto the insurance market?

Although I don’t doubt that there is more motor insurers, brokers and MGAs could do to improve their user experiences and customer service, I also don’t think we can disregard the impact of seemingly ‘victimless’ insurance fraud knowingly committed by customers in order to obtain a cheaper premium.

Research from The Green Insurer published in May 2024, which polled 1,074 adults aged over 18, found that 28% of UK motorists lie when applying for motor cover so that they can secure a cheaper premium.

Around a quarter (21%) of respondents understate their annual mileage, while 6% cite a fictitious garage in their application.

The cost of living crisis and high inflation has hit many personal purse strings – and hard. We can all understand why individuals and families may seek to cut financial corners, but the public’s awareness that stretching the truth in insurance applications counts as fraud is dismally low.

Not only does fraud often increase premiums – thanks to the cost of anti-fraud investigations and measures – but motor claims could be rejected too, leaving insureds out of pocket. The Green Insurer’s findings noted that 31% of 18 to 24-year-olds have had a claim rejected or scaled back because they didn’t tell the complete truth at policy inception.

If insurance applications are not showcasing the full risk picture, then motor insurance firms are somewhat handicapped in the help they can provide in the event of a claim.

Education is so vital here – something I feel brokers can really lead the charge on.