15th November 2024
Trust in insurers was stable from Spring-Autumn 2024, though trust in car insurers continues to decline. Our research suggests that dissatisfaction with price and poor claims experiences are key drivers of customer distrust.
At Fairer Finance, we've been tracking public attitudes on insurance for several years. We poll 10,000 customers every six months, through the pollster Opinium, and ask them:
'Based on everything you know about this insurer, to what extent would you agree or disagree with the following statement - "I trust [name of their insurer]"'
We take the responses to this question and convert them into a trust score,1 which we use to track trust in insurers through our Trust in Insurance Index. Our trust score subtracts negative responses from positive ones and double-weights the most positive and most negative options. We do this so that we have a single number to measure trust, and to give due weight to strong opinions.
The latest update to the Index - Autumn 2024 (which includes polling completed in September) - shows that trust in insurers is basically level with the Spring 2024 edition.
After a long period of improvement from 2017 to 2022, trust in insurers has levelled off and, in the last 18 months, fallen slightly - mainly as a result of declining trust in home and car insurers.
Car and home insurance are both sectors that have seen significant rises in premiums in recent years.
To understand what drives trust and distrust more fully, though, we need to see which groups have higher and lower levels of trust in their insurer.
A crucial test of an insurer is how it performs when a customer makes a claim.
Comparing the responses of customers who had made a claim in the last three years with those who hadn’t, we see that those who had made a claim were more trusting in their insurer. This was true across all insurance sub-sectors.
This result suggests most insurers are doing a reasonably good job when it comes to handling claims.
It also explains why pet insurers have consistently been above-average in the Trust Index: claims are more common in that sector.
Another result that is consistent across insurance sub-sectors is that customers with higher household incomes (over £70,000) are more trusting than those with lower household incomes.
There are a few possible reasons for this.
First, more affluent customers can absorb higher premiums more easily. This means that their trust in their provider is less likely to be eroded by rising prices.
Second, wealthier customers can afford greater levels of cover. This means that their claims are less likely to be rejected, which would diminish trust.
Third, high income customers’ greater ability to pay means they can choose insurers with better reputations for customer service, boosting trust.
Financial resilience - measured by how far customers struggle to repay bills - has a similar relationship to trust. Customers who say bills ‘aren’t a burden at all’ have higher trust than those who say bills are a burden. This is consistent with high-income customers being more trusting on average.
Customers who have high self-rated confidence managing money (9-10 on a 0-10 scale) are more trusting of their insurer than those with low self-rated confidence (0-6).
Again, there are a few possible reasons for this.
First, confidence managing money is correlated with income, so the reasons that high-income customers are more trusting also apply to high-confidence customers.
Second, customers with greater confidence managing money may be better at finding insurers that excel at the things that they value and which build trust, such as customer service and good claims processes.
Third, confident customers are in theory better equipped to understand insurance than low confidence customers. As a result, they are less likely to think that they are covered when they’re not - an outcome that might reduce trust if they needed to make a claim.
Customers who trust their insurer tend to be happy with all the aspects of their insurance - from the price, to the cover, to the customer service. Customers who don’t trust their provider tend to be unhappy with those things.
But are there some features of insurance that trusting customers especially like, and distrusting customers especially dislike?
In our Autumn 2024 polling, we asked respondents to rate their satisfaction with various features of their insurance policy on a five-point scale from ‘extremely satisfied’ to ‘extremely dissatisfied’.
Below are the net satisfaction figures for car insurance. The chart compares the responses of customers who said they ‘agree’ or ‘strongly agree’ that they trust their insurer (trusting customers) with those who ‘disagree’ or ‘strongly disagree’ (distrusting customers).
Trusting customers tend to be very happy with their level of cover. They also have very high levels of satisfaction with customer service, the ease of managing the policy, and the provider’s digital offering.
Distrusting customers, on the other hand, are particularly unhappy with the price, value for money, and fees and charges of their insurance.
The aspect of car insurance where there is the largest gulf between trusting and distrusting customers is claims satisfaction. Trusting customers had a net satisfaction rate of +91% when it came to their experience of making a claim in the last three years. For distrusting customers the figure was -56% (though the sample was small).
This suggests that bad claims experiences, as well as high premiums and fees, are key reasons that people lose trust in their insurer. Having high standards of customer service, meanwhile, is important for winning and retaining trust.
Focusing on the car insurance sector, we can see differences in levels of trust when we compare different providers. Looking at the eight largest insurers in our polling data (by sample size), AA, Direct Line and Churchill (both part of the Direct Line group) stand out as brands with above-average levels of trust.
We also ask customers why they picked their car insurer. Firms that were often chosen because of their reputation tend to have higher levels of trust.
In this case, it’s hard to say which is cause and which is effect. Customers might trust firms with good reputations more because of their reputations. AA, for example, has a strong reputation as a breakdown cover provider, which may well have spillover benefits for customer perceptions of it as a car insurer.
On the other hand, firms with good reputations may have got those reputations by generally treating their customers well. In that case, it shouldn’t be surprising that firms chosen for their reputation tend to have more trusting customers.
Firms more often chosen because they are competitive on price, meanwhile, tend to have lower trust scores.
This suggests there is something of a price/reputation trade off. It could be that customers trust more expensive brands because they are more expensive. Or it might be the case that more expensive providers are able to invest more in customer service, for example, because they tend to charge more.
As premium inflation cools from the highs of 2023, we should see trust in insurance tick upwards again.
But there is more to being trusted than price. If the quality of customer service deteriorates, or if claims experiences get worse, trust in the sector will likely suffer.
1 The question has the following options: "strongly agree", "agree", "neither agree nor disagree", "disagree" and "strongly disagree". The trust index score is calculated using the following formula: ((% answering strongly agree x 2) + (% answering agree) + (% answering disagree x -1) + (% answering strongly disagree x -2))/ 2. We use this formula to subtract those who distrust a provider from those who trust them, to give additional weight to those answering strongly agree and strongly disagree, and to create a single score to compare sectors and track change over time.