Home insurance customers are paying more for a worsening quality
of service, Which? research has found, as the consumer champion
calls on the FCA to get tough with firms that are performing
poorly.
Which? is calling on the Financial Conduct Authority (FCA) to
take decisive action against home insurers failing to meet
standards, amid growing concerns over claims handling and rising
premiums.
A survey of over 1,500 home insurance policyholders found that
around four in 10 (44%) claimants had to chase their insurer to
progress their claim. Concerningly, around a third (34%)
expressed regret about making their claim in the first
place.
The report comes two months after the consumer champion found
that almost half (48%) of all people making a claim across home,
travel, motor and pet insurance encounter at least one problem
during their claim journey.1
Despite these issues, premiums have been steadily climbing, with
sales data published by Go.Compare revealing a 31 per cent
increase in the average cost of combined buildings and contents
cover over the past year, reaching £241 between April and June
this year.
Which?'s survey revealed a concerning gap between escalating
prices and muted satisfaction. Two-thirds (64%) of respondents
reported higher premiums at renewal and one in 10 (11%)
experienced an increase they felt to be ‘significant'. LV, More
Than and Policy Expert were among the insurers with the highest
proportions of customers facing these steep hikes. 85 per cent of
claimants with LV said their premium had increased, 76 per cent
of those with More Than, and 78 per cent of customers with Policy
Expert.
The average customer score in the survey was just 65 per cent,
with scores ranging from 59 per cent (TSB) to 70 per cent (Axa).
For the first time since the Which? Recommended Provider (WRP)
endorsement launched in 2010, no provider met the criteria to be
named a WRP. Axa narrowly met the minimum customer score of 70
per cent but was not awarded WRP status due to limitations in its
standard policy coverage.
The findings highlight a range of concerning indicators from both
regulators and the industry, including rising premiums,
decreasing claims acceptance rates2 and record complaints3 as
potential drivers of reduced satisfaction in the home insurance
sector. Many respondents cited poor value for money as a major
factor behind their dissatisfaction. Eight out of 20 brands rated
by claimants in our analysis for their claims service also
received two out of five stars for the settlement value of their
claims.
Insurers have attributed recent price hikes to escalating claims
costs, with the industry paying out a record £1.4 billion on
property claims between April and June, up from £782 million in
the same period last year, according to the Association of
British Insurers (ABI).5Extreme weather conditions, including
heatwaves and droughts, have driven subsidence claims to a record
£60 million.
The FCA is currently reviewing insurers' claims-handling
practices, which the consumer group believes will mark a big test
of the regulator's Consumer Duty. The FCA has made clear that
insurers should already have been meeting many parts of the Duty
based on longstanding requirements, and that the introduction of
the Duty should have been a less significant change than for
other parts of the financial services sector. Which? is urging
the FCA to address issues with how firms are handling claims, and
to take tough action against any firms falling short of required
standards.
The consumer champion's campaign to end the insurance rip-off is
also calling for the regulator to clamp down on car and home
insurers charging customers who pay monthly excessively high
interest rates.
Rocio Concha, Which? Director of Policy and Advocacy, said:
“Our research exposes a troubling disconnect between what
customers are paying for home insurance and the service they
receive.
“It's clear that many insurers are falling short in supporting
customers when they need them most, resulting in declining
satisfaction and record complaints. These practices are
unacceptable, especially as premiums continue to soar.
“It's time for the FCA to hold insurers accountable and ensure
that firms treat their customers properly if they make a claim
and provide fair value.”
ENDS
Notes to Editors
Support Which?'s new campaign to End the Insurance
Rip-Off
1Consumer harm in the insurance
process' paper published in July
2General insurance value measures
data 2023
3Buildings insurance complaints
hit a 10-year high
4Which? calls for urgent FCA
action, as research reveals insurers still hitting customers with
crippling interest rates for paying monthly
5Property insurance payouts hit
record quarterly high
Research
In June and July 2024, Which? surveyed 1,678 home insurance
policyholders (1,507 members of the public and 171 members of our
Which? Connect panel) who own home insurance and have claimed in
the past two years. Customer scores represent claimants' overall
satisfaction and likelihood to recommend their insurer.
No provider achieved Which? Recommended Provider status.
11 policies were awarded Which? Best Buy status.
