The Big Question October 2023: How can insurers reduce complaints made about them?

Matthew Maxwell Scott, executive director, Association of Consumer Support Organisations

Insurance is an unloved product, bought grudgingly or, as with motor insurance, on a compulsory basis. 

Price wars might explain why service quality is not always what it should be, as reflected in the FOS’ latest data. Those complaining will generally be doing so because the treatment they received at the point of making a claim was either not what they expected, or failed to match past experiences. 

The sudden need for insurers to adopt new ways of working in the face of the Covid lockdowns will be playing a part here too, with many organisations still playing catch-up and struggling to fill many posts in the face of a tight labour market and higher wage demands.

However, in the case of personal injury motor claims, the number of these has dropped precipitously since the government’s whiplash reforms, so you would hope that lower volumes might be more easily managed. It seems not.

Insurers need to turn this around. A grudge product is one thing, but a sub-standard one is quite another. An industry that has long struggled to gain trust might find life even harder in the context of the new Consumer Duty, growing media attention and, perhaps, a less friendly incoming government next year. Insurers need senior management attention on this now or could face unwelcome consequences.

Alison Williams, managing director, Prestige Underwriting 

In the complex landscape of nonstandard insurance, MGAs and insurers face a myriad of challenges in their drive to provide excellent customer outcomes. These challenges encompass a wide array of factors, including pricing strategies, value delivery, customer service perception and the extent of coverage offered.

However, the surge of car and motorcycle insurance complaints filed with the FOS demands the vigilant attention of every MGA and insurer. This surge is not just a matter of regulatory compliance, but also a fiduciary responsibility. It underscores the need for a deeper examination by both MGAs and insurers.

The escalating costs of parts, repairs and labour have left an indelible mark on the insurance market, contributing significantly to the rise in complaints regarding claims processing delays. Nevertheless, MGAs and insurers must delve deeper into the issue.

At Prestige Underwriting, we are committed to delivering superior outcomes for both brokers and customers, particularly regarding claims. The majority of brokers we work with recognise the significance of fostering a constructive relationship among MGAs, brokers and policyholders to achieve our shared objectives. Our aim is to share our expertise, promote sound management practices, reduce costs and enhance operational efficiency.

This approach is not only critical for lowering the FOS upheld rate, but also for decreasing claims volume, ultimately resulting in superior outcomes for valued customers.

Catherine Carey, head of marketing, Consumer Intelligence

Our research tells us that most policy holders expect claims to be processed quickly and efficiently. However, over 60% of claimants cite speed and efficiency as the element of the claims experience needing most improvement. This means there is too often a fundamental mismatch between what a customer expects and what they receive.

The rising cost of insurance is only going to intensify customer expectations, leaving potential for a further increase in complaints alongside premium inflation if the industry is not able to make the necessary improvements promptly.

Insurance firms need to truly understand what their customers expect from them, as well as the claims experience they are currently delivering, to ensure they are armed with the insights that will enable them to bridge the gap.

Osian Rees, head of sales, Investec Premium Finance

Investec Premium Finance recognises the multifaceted challenges that insurers must effectively manage to ensure good customer outcomes. Nevertheless, insurers and the rest of the industry will have monitored the recent surge in car and motorcycle insurance complaints reported by the FOS.

It will no doubt require a comprehensive approach to address. In particular, insurers must scrutinize why, in cases where applicable, their upheld rate has increased. The proportion of claims where the FOS has deemed the insurer’s decision incorrect is a telling indicator of the adequacy of their approach.

For insurers witnessing an uptick in the upheld rate, a review of their procedures and decisions pertaining to denied claims, claim valuation and the administration and disbursement of claims is imperative.

Given that Consumer Duty directly encompasses consumer comprehension, insurers should also evaluate their communication of policy coverage levels and ensure transparency and fairness in premium financing.

At Investec Premium Finance, we take pride in our commitment to transparency and exceptional service. For example, the only fee we charge is a very modest administration fee. We have no hidden late payment fees which, by their nature, often lead to complaints from both customers and brokers. 

In the current challenging business landscape, insurers must be resolute in their efforts to reduce the upheld rate, diminish the overall volume of complaints, and ultimately provide good outcomes for their valued customers.

Stephen Kennedy, director of insurance pricing, Pearson Ham

One of the key factors impacting insurers’ costs recently has been contractor availability and delays in the time taken to carry out repairs, which is also contributing to increasing customer complaints. While insurers have limited power to improve labour shortages, there are other elements which can be addressed.

A year-on-year 50% rise in car and motorcycle insurance complaints cannot be ignored and neither can the increase in the FOS complaint upheld rate. Not least because of the pertinence that customer complaints have with Consumer Duty.

Certainly, the costs of repair, replacement and labour have risen significantly, impacting insurers. That will largely account for the 90% jump in cases about delays in claims. However, the latest results will also require deeper analysis by insurers.

Particularly why, if applicable to a firm, the upheld rate has risen. The proportion of claims for which the FOS has told the insurer they got their decision wrong will indicate whether their approach is right.

If the upheld rate has risen for an insurer, they will need to closely assess their procedures and decisions around claims being declined, how they value a claim and how they are administered and paid out.

As consumer understanding is directly covered by Consumer Duty, they should also be assessing communication of policy cover levels and whether premium financing is transparent and fair. Investment may also be required in service levels and improving consumer support.

It’s a tough trading environment right now, but insurers need to focus on actions to bring down the upheld rate, reduce overall complaints volume and deliver better outcomes for their customers.

Charlie Robinson, head of wholesale, Kingsbridge 

At Kingsbridge Wholesale, our steadfast commitment to delivering exceptional service stands as the very foundation of our business. For us, excellence in service is not merely an aspiration, it is an absolute necessity.

For personal lines (PL) firms, reducing the FOS upheld rate and curbing overall complaint volumes should transcend being mere business objectives. These goals are intrinsic to achieving superior outcomes for customers.

Within the PL space, MGAs will be collaborating closely with their broker partners to address these challenges. The significance of fostering constructive relationships among MGAs, brokers and policyholders to achieve this cannot be underestimated. It is crucial that MGAs share their expertise and advocate for sound management practices to empower brokers, thereby benefiting customers.

This approach is not only instrumental in lowering the FOS upheld rate but also in reducing claims volume, ultimately culminating in good outcomes for customers.

Jeff Winn, executive chairman, Winn Group

Regrettably, the rapid increase in complaints against insurers comes as no surprise. The well reported problem of insurers undervaluing the pre-accident value of vehicles is a significant issue.

Even when presented with independent engineering evidence confirming the accurate value, some insurers still refuse to pay. There is reference in the review to delayed claim settlements and that reflects our experience.

Some insurers preserve cash by delaying claims, but will pay £2,000-3,000 a claim more in 12 months as a result.

This is regrettable because it adds pressure on insurers to increase premiums and it is avoidable by using appropriate protocols and settling claims without the need for proceedings to be issued.