Colin Auton provides the latest on consumer attitudes and behaviours in the personal-lines insurance sector, and questions the extent to which Consumer Duty is having any impact on customer experiences.
There’s been a lot of references to this year being Twenty-Twenty Thrive. Whilst consumer confidence seems to be improving (based on GfK’s latest Consumer Confidence Index), albeit slowly, it’s certainly been hampered by a combination of factors during the second half of 2024, including the UK Government’s negative rhetoric during the Summer, the October budget and recent media stories about the economy.
This is further reinforced by recent research results published by KPMG which showed that whilst nearly three times as many people in the UK feel secure (57%) than insecure (21%), views towards the economy are more mixed, with more than 2 in 5 (43%) feeling it’s getting worse compared to 1 in 4 who think it’s getting better.
In the same survey, it was interesting to see that there was the highest intention to switch provider to save money for car insurance (27%) and home insurance (26%). Retention continues to be a major challenge for insurers as they continue to navigate regulatory, technological and economic as well as competitive pressures. This is on top of the ban on price walking by the FCA in January 2022, and the need to increase premiums to cover rising costs.
Also recently published were the latest UKCSI results. This showed that overall customer satisfaction levels have remained pretty static in the insurance sector compared to 12 months ago. Of the 24 insurance providers rated, only three were in the Top 50 organisations for customer satisfaction; Nationwide Insurance (=26th), Churchill (37th) and SAGA (=41st).
Compare this to Banks & Building Societies, which had four providers in the top 10 of the 19 rated. This will be influenced to some extent by insurers have less opportunity to engage with customers; for the majority it’s only at renewal. However, the lack of improvement at an overall sector level is disappointing.
“I never hear anyone mentioning a particular insurance brand as standing out for quality of service (compared with other sectors)”
These latest UKCSI results also suggest that the Consumer Duty initiative introduced by the FCA in July 2023, designed to improve the level of treatment, support and outcomes for consumers, hasn’t yet translated to an uplift in customer satisfaction in the insurance sector. They also support the fact that I never hear anyone mentioning a particular insurance brand as standing out for quality of service in the same way that brands are in other sectors.
I’m sure that there are insurer CSat and brand trackers that contradict the above and point to an improvement in service levels and show that they stand out for great service. To provide a degree of balance, the UKCSI report also highlights that the insurance sector stands out from the rest for their telephone service experience.
Nevertheless, the latest FCA review highlighted the need for insurers to improve their data quality and MI to evidence good outcomes for customers and inform key areas for improvement.
In our view, insurers should be looking for more from their research partners to address the FCA’s recommendations:
- We’re always looking at how we can connect data and feedback from all internal and external sources to inform understanding.
- For qualitative research, we make sure to use the right methods and creative questioning techniques to explore unmet needs, the positives and pain points, what ‘great’ looks like, and what truly makes a customer stick with their insurer.
- We design trackers that measure the right things and are sensitive enough to pick up the key issues and nuances for insurers to act on that will truly make a difference to the bottom line.
- We’re using AI and digital automaton solutions to share results quicker for action.
- We explore what’s happening in other sectors to share ‘best in class’ examples that our clients can learn from to inform improvements in the drive to deliver exceptional customer experiences
If any of the above resonates, regardless of what sector you work in, we’d be happy to discuss this further, understand the issues that you’re facing, and share ideas on how we can help and support you.