15 December 2023
How Trusted are Car Insurers?
Fairer Finance has been tracking trust in the insurance industry for the last 10 years.
We publish the results of our Trust in Insurance index every six months. The latest wave of data - compiled using the results of our six monthly poll of 10,000 UK consumers - shows trust in the insurance industry is levelling off after a decade of steady improvement.
In the car insurance sector - where prices have risen sharply over the last year - trust levels are already in decline.
Key findings from H2 2023:
- Trust in insurance has stalled since 2022
- Trust in car insurers has gone into reverse as premiums and complaints rise
- Those who have made a claim on their car insurance in the last three years are more trusting than those who haven't claimed
- The most trusted car insurers have strong brand reputations
- The least trusted car insurers tend to gain more business by competing on price on comparison sites
Why is trust in car insurers stalling?
One obvious reason that trust in car insurers has stopped rising is that prices have gone up dramatically over the last year. According to Consumer Intelligence, the average quoted car insurance premium rose 61% in the year to August 2023, with the rise between June and August 2023 being the biggest quarterly increase since Consumer Intelligence began collecting this data in 2013.
Our data shows that price is the most commonly cited reason for customer dissatisfaction in car insurance (52% of unhappy customers give this a reason for their dissatisfaction). If customers feel that price rises are excessive, they are likely to lose trust in their provider.
A second factor that could be eroding trust is the claims process.
The vast majority of claims are paid in car insurance. According to the FCA, 99% of claims relating to car insurance were accepted in H2 2021. This does not mean that everything is well in the sector, however. Our data shows that a quarter of unhappy car insurance customers cite difficulty in managing a claim as their reason for dissatisfaction. Data from the Financial Ombudsman Service (FOS) shows that the number of complaints referred to the Ombudsman relating to car and motorbike insurance rose 50% between Q1 2022 and Q1 2023 and that the complaints that increased the most over that period were those relating to delays in settling claims, which increased 90% year on year.
Like rising prices, ineffective claims processes can reduce customer trust by making them feel their insurer either doesn't care about them or isn't treating them fairly.
Which car insurers are most trusted?
Our data shows that the most trusted providers are NFU Mutual, BMW and John Lewis. At the other end of the table are Budget, One Call Insurance and Zenith Insurance.
Among the eight largest car insurers (by sample size in our survey), AA comes top, with Hastings at the bottom, though the differences are fairly small.
When we compare different groups, we can see that men and women have broadly similar levels of trust, as do different ethnic groups. Younger drivers (18-30) have slightly higher rates of trust than older age groups - which is somewhat surprising given they generally pay higher premiums. Those who have made a claim in the last three years are more trusting than those who haven't. This is likely because the vast majority of claims are accepted in car insurance, meaning that those who have claimed will probably have had their claim approved and so trust their insurer more on the basis of that positive experience.
What drives trust in car insurers?
One attribute that highly-trusted car insurers have in common is that their brands have strong reputations. In our polling, we ask respondents why they chose their car insurance provider - one of the options is 'The brand's reputation'. There is a strong correlation (0.75) between the proportion of respondents who 'strongly agree' that they trust their provider and the proportion saying they chose their provider because of its good reputation.
Conversely, there is a moderate negative correlation (-0.61) between the proportion of customers who strongly trust a provider and the proportion saying they chose the provider because it was the cheapest on a comparison site. This suggests that brand which compete more on price than on service may be seen as less trustworthy.
The implication for providers, then, is that they need to do more that offer low prices to earn their customers' trust. They also need to build their brand's reputation, for example by working on their customer service and the quality of their claims processes.
Levels of trust and distrust by insurance sector
Every six months, Fairer Finance, via the pollster Opinium, polls around 10,000 insurance customers and asks them the following question: "Based on everything you know about this insurer, to what extent would you agree or disagree with the following statement - 'I trust [name of provider]'?". Respondents answer once for every type of insurance policy they're responsible for buying.
The question has the following options: "strongly agree", "agree", "neither agree nor disagree", "disagree" and "strongly disagree". Below are the percentage of respondents who answered either "strongly agree" or "agree", by sector.
The figure below shows the percentage of respondents who answered either "strongly disagree" or "disagree", by sector.