Vulnerable customers less likely to shop around for home and motor cover – Consumer Intelligence

Vulnerable customers as a group are less likely to shop around for home and motor insurance compared to non-vulnerable customers, according to Consumer Intelligence’s latest report.

Released today (1 February 2022), the report added that vulnerable customers use price comparison websites more.

Entitled Vulnerable customers in the age of the cost-of-living crisis, the report assessed how insurers are responding to the FCA’s focus on vulnerable customers.

Consumer Intelligence analysed data from more than 25,000 home insurance and 25,000 motor insurance customers.

It revealed that, for home insurance, 44% of vulnerable and 51% of highly vulnerable customers received the same or a better premium offers at renewal.

Similarly, for motor insurance 44% of vulnerable customers and 50% of highly vulnerable customers received the same or a better price at renewal.

Comparable Consumer Intelligence figures for non-vulnerable customers in home insurance showed that 42% received the same or a better price at renewal, while for motor 46% received the same or better price at renewal.

The report further revealed that up to 42% of home insurance customers were potentially vulnerable with 15% highly vulnerable.

Meanwhile, 41% of motor customers are potentially vulnerable, with 13% of these defined as highly vulnerable.

Catering to the vulnerable 

Ian Hughes, chief executive of Consumer Intelligence, said: “The FCA’s latest regulation demands that firms throughout the financial service sector get to grips with vulnerability and ensure they are appropriately catering for the needs of these customers.

“But understanding this through your own lens won’t be enough. It is vital providers gain an understanding of how they benchmark against the market and their peer group in terms of their performance in delivering good outcomes for vulnerable customers.

“By doing this, providers will be able to identify where improvements need to be made and take decisive action.“

The FCA defines a vulnerable customer as ”someone who, due to their personal circumstances, is especially susceptible to harm – particularly when a firm is not acting with appropriate levels of care”. 

The regulator said that, to achieve good outcomes for vulnerable customers, firms should:  

• Understand the needs of their target market and customer base.
• Make sure staff have the right skills and capability to recognise and respond to the needs of vulnerable customers.
• Respond to customer needs throughout product design, flexible customer service provision and communications.
• Monitor and assess whether they are meeting and responding to the needs of customers with characteristics of vulnerability and make improvements where this is not happening.

Consumer Intelligence’s criteria for assessing vulnerability included age, income, length of time with the insurer as well as data on employment and socio-economic group.