Consumer trust in insurers falters

Only 13 per cent of British consumers trust their current preferred insurance provider, and only eight per cent have been loyal to their insurer for more than three years, according to new research from Ello Group. The 1,000-consumer survey also revealed 42 per cent are not loyal to their home, car or life/health insurance providers – just a two-per-cent improvement on last year. This is despite new Financial Conduct Authority (FCA) regulation to protect loyal customers from paying more coming into play earlier this year.

Regulatory efforts not sufficient to induce loyalty

In January 2022, the FCA introduced new rules to tackle price walking and the act of continuously increasing prices for loyal customers across the home and motor insurance sectors. However, the current UK economic crisis is making it increasingly more challenging for insurers to honour/reduce pricing on previous years.

The UK’s cost-of-living crisis is also leading to a rise in brand switching amongst consumers, with many expecting some help to alleviate this pressure. In fact, on being asked what would improve their trust in insurers, close to one in five (17 per cent) said brands could be absorbing some of the increasing costs throughout their supply chains. Sixteen per cent said brands could offer discounts at relevant places.

Michael Kalli, managing director of Ello, commented: “It’s no secret the insurance sector has long struggled with customer retention – and our last two pieces of research have solidified the fact the sector is amongst the worst performers on the customer loyalty front. While things are slowly but surely heading in the right direction, there’s more insurers could be doing to improve trust amongst their customers, in turn instilling loyalty and retention.”

On the key factors influencing a consumer’s decision to stick with an insurance provider long-term, the data revealed these top areas of importance:

1.           Price (38 per cent)

2.           Good customer service (19 per cent)

3.           Reliability (17 per cent)

4.           Trust (17 per cent)

5.           Quality of product service (16 per cent)

Ranked in order, the research also revealed the best-performing sectors for customer loyalty – with the insurance sector remaining in the bottom four:

1.           Supermarkets

2.           Mobile provider

3.           Finance/banking

4.           Food services/restaurants

5.           Telecoms (landline, at-home broadband provider)

6.           Media (streaming services incl. TV, music, entertainment)

7.           Utilities (gas and electricity suppliers)

8.           Fashion retailers

9.           Insurers (home, car, life/health)

10.         Hotels/hospitality

11.         Travel (airlines, trains)

12.         Leisure (gyms, cinemas)

In addition, just five per cent feel a connection to their existing insurer and a loyalty to them, while only eight per cent believe their current insurer understands them as a customer. While close to one in ten would remain loyal if their existing insurer could help them make cost savings in other areas, such as eating out, food/drink, plus travel/leisure.

“The statistics are incredibly concerning amongst even the best-performing sectors on the customer loyalty front. But there are ways providers can showcase that they listen to customers and ultimately understand their wants and needs. This is becoming increasingly important in the current cost-conscious climate and will only help build trust – one of the leading factors influencing a customer’s decision to stick with an insurer long-term,” concludes Michael.

For more insights, Ello’s full ‘driving customer connections during challenging times’ report can be found here: https://www.ellogroup.co.uk/driving-customer-connections-during-challenging-times