Top insurers and brokers for customer experience revealed

LV= has been named the best insurance provider for customer experience, but overall industry performance for this metric has fallen over the last 12 months.

The insurer, which was awarded a Gold Award for its performance by new data insight and consultancy firm Insurance DataLab, received a customer experience rating of 74% for 2021, marginally up on the 73% rating received retrospectively for 2020 and in line with the 74% received for its 2019 performance.

This means that the insurer, recently acquired by German giant Allianz, extended its lead over the second-ranked provider by two percentage points, as well as outperformed the market average by an impressive 11 percentage points.

Sitting in second place overall for 2021 is Hastings, with an overall customer experience rating of 72%. This is in line with its performance for 2020, but a significant improvement on the 56% rating the insurer received in 2019, making it the second most improved provider over the last three years - behind NFU Mutual.

Hastings’s performance has been buoyed by a significant improvement in its complaints handling, where the provider’s score has risen from 45% in 2019 to 72% for 2021.

While complaints handling has been the standout improvement for Hastings across the last three years, the provider has also improved its performance across all three of the key metrics it has been rated for within this analysis, based on figures from Insurance DataLab, research agency Fairer Finance and consumer review website Trustpilot (see Methodology).

Meanwhile, in third place overall - with a score of 71% - is Budget.

Despite a slight dip in its rating for complaints handling compared to 2020, the broker reported an improved performance from Fairer Finance for each year of this analysis, with a score of 56% for 2021, compared to 51% in 2020 and 45% in 2019.

This helped the broker receive an overall rating in line with the 71% it received in 2020, which is 10 percentage points higher than the 61% recorded in 2019.

Rounding off the Insurance DataLab Gold Award winners is Covea, which also reported a 71% overall customer experience rating for 2021.

This is slightly down on its 73% rating for 2020* – driven by a decline in the insurer’s complaints handling performance of nine percentage points – but the score still shows a nine percentage point improvement on the 62% it received for 2019.

Dragged down by poor complaints handling

Despite this strong performance from industry leaders, the average customer experience rating across the 25 providers analysed by Insurance DataLab dropped to 63% for 2021, from 67% in 2020.

This drop in performance was driven by a worsening of complaints handling, which saw the market’s average complaints score fall from 70% in 2020 to just 56% in 2021 – the same level the market achieved in 2019.

While the average upheld rate, which represents the proportion of Financial Ombudsman Service (FOS) complaints found in favour of the customer, remained steady at 25% compared to 2020, the number of cases in the most recent set of data, sourced through a Freedom of Information request, has rocketed.

Indeed, the number of cases received by the ombudsman across the 25 insurance companies included in this analysis rose by almost a third over the course of the last year, excluding solely commercial products, such as business interruption (BI) cover.

The first quarter of 2021 alone experienced a rise of 55% compared to the same period in 2020.

Across the whole of UKGI, which includes companies outside of the rankings in this report, the FOS received 10,354 complaints about these products in the first quarter of 2021, a 71% increase on the same period in 2020.

This marked the fourth consecutive quarter of year-on-year increases in complaints volumes, with complaints over the course of those four quarters rising by an average of 44%.

Unsurprisingly, travel insurance was a major driver of this increase, with the sector seeing complaints numbers more than treble in the wake of the Covid-19 pandemic due to the disruption it caused to the travel and tourism industries.

Travel insurance had a total of 8,145 complaints referred to the ombudsman over the 12 months to the end of March 2021 – the second most complained about product behind motor insurance.

This compares to just 2,562 complaints for the same period a year earlier.

Pet and livestock insurance also saw a surge in complaints, no doubt driven in some part by the 3.2 million pets bought by UK households during the government-imposed lockdowns.**

Complaints about the product nearly quadrupled to 1,424 for 2020/21, compared to just 371 in 2019/20.

Another pandemic-hit sector was special event insurance, which includes wedding cancellation cover. The FOS received a total of 449 complaints about this product for the year to March 2021, compared to just 12 for the same period in 2019/20.

Cover concerns

An area where insurers experienced a marginal dip in performance was on the claims experience and quality of cover, as assessed by their broker partners.

Only seven of the insurers in this analysis are rated as part of the Insurance Times Five Star Ratings for personal lines - for these companies, the average rating across claims and quality of cover both fell slightly by one percentage point.

This means the market average performance for claims performance stands at 77% for 2021, compared to 78% a year earlier, while the quality of cover rating fell to 81% (2020: 82%).

Indeed, of the seven insurers rated by brokers, five were found to have a declining claims experience compared to 2020, while four were ranked lower on their quality of cover.

Meanwhile, three of the seven reported a weaker performance across both metrics over the last year and only one was ranked higher by brokers on both measures in 2021 compared to 2020.

At an aggregate level across both measures, the seven insurers received an average rating of 79% in 2021. This is down from a score of 80% in 2020, but is still an improvement on 2019’s average score of 78%.

Brokers v insurers

When it came to how brokers and insurers performed against each other for customer experience, Insurance DataLab found that brokers outperformed insurers across all three years of its analysis.

The gap has been closing, however, with brokers outperforming insurers by just three percentage points in 2021, with an average score of 65%, whereas the gap stood at five percentage points in both 2020 and 2019.

This outperformance comes mainly from the strength of brokers’ customer reviews, which account for around a third of the overall experience score.

The broker market received an average Trustpilot TrustScore, which is an overall measurement of reviewer satisfaction, of 88% compared to 71% for insurers – this means that brokers scored 17 percentage points higher than insurers.

Of course, this should not come as a massive surprise to the industry given that brokers are required to act in the interest of their customers and should, therefore, be fighting their corner, particularly when it comes to getting claims paid.

On the other measures within Insurance DataLab’s analysis, however, brokers have often been found wanting when compared to insurers.

For example, insurers received an Insurance DataLab complaints handling score of 59% in 2021, which, despite being 10 percentage points worse than the 69% achieved in 2020, is still eight percentage points ahead of the 51% achieved by brokers.

Indeed, brokers reported a 22 percentage point worsening of their average complaints handling score over the last year, which goes some way to explaining how insurers have been closing the gap on their broking peers.

Insurers were also ranked slightly higher by Fairer Finance on customer experience - the metric used in this analysis rates both happiness and trust levels, as well as the transparency of user journeys and policy documents, but does not include Fairer Finance’s complaints analysis. Based on this, insurers achieved an aggregate score of 56% in 2021, compared to 55% for brokers.

This was a marked improvement on previous years, with insurers’ average score rising three percentage points from the 53% reported in 2020 - plus an even further improvement on the 52% reported in 2019.

The performance of brokers, meanwhile, has stagnated, with their overall score from Fairer Finance staying relatively level at around 55% in each of the last two years.

Despite this, brokers did report a much-improved performance on transparency.

The brokers in this analysis received a transparency score of 61% in 2021, up from 55% in 2020 and 44% in 2019 – this is three percentage points ahead of the 58% achieved by insurers this year.

A new era

With so many unknowns still surrounding how the industry will respond to the recent FCA changes around fair value, it will be interesting to see how these figures change over the coming months and years.

While insurers have continued to close the gap on brokers, this has not been down to insurer improvements – after all, the aggregate performance around customer experience has declined for brokers and insurers alike over the last 12 months.

Covid-19 has, of course, had its role to play in this decline, but customer expectations will only increase as the country continues to emerge from lockdown.

The insurance industry must now be ready to meet those expectations. And, in the age of fair value, those that don’t may well find themselves left behind, struggling for both growth and profitability.

 

* NOTE: Covea’s Fairer Finance ratings for 2019 and 2020 use the market average due to a lack of available data for those years.

** Figure published by the Pet Food Manufacturers’ Association (PFMA) in March 2021.