Briefing: Is the insurance industry still underestimating the cost of poor service?

In an industry built on trust, high quality service should be non-negotiable. But far too often, it still feels like an afterthought – with long wait times, unclear communication and slow claims handling continuing to frustrate insurance customers.

I’ve seen this trend myself – in data when I analyse ombudsman complaints figures, as well as in my own experience of making claims on personal policies.

Having been in and around the insurance industry for more than a decade now, I know that the vast majority of insurance companies genuinely want to do the right thing by their customers.

But in a world where resources are in high demand and profitability is under constant pressure, service is too often positioned behind distribution and product, rather than being treated as a core driver of commercial success.

Take claims handling. It is arguably the most important touchpoint in the customer journey. Yet it is still all too common to hear about delays and poor communication with policyholders. And that does not just impact satisfaction scores – it affects retention, referrals and, ultimately, the bottom line.

Just last week, I spoke to a family member who had been waiting since January to be reimbursed for a new car seat after her car was driven into while parked in a supermarket car park. Liability and coverage had all been confirmed, but for some reason, this payment remains unresolved.

Then there is the issue of access. Brokers trying to get hold of underwriters or policyholders chasing updates on simple queries are often met with slow response times, inadequate automated responses, or passed around departments with no clear resolution.

That might be understandable during periods of peak demand, but when that becomes business as usual, it chips away at trust and damages the overall user journey.

It is also telling that underwriting experience and relationship management were the two lowest rated service factors across both commercial lines and personal lines in Insurance Times’ most recent Broker Service Survey, which underpinned the publication’s Five Star Rating Report: Commercial Lines and Personal Lines, published in March 2025.

An imperative metric

What is most frustrating is that much of this service slump is avoidable.

Simplified internal workflows, clearer communication and more empowered frontline staff can make a huge difference. Technology also has a role to play, helping to streamline and automate repetitive processes while freeing up staff for more complex and valuable tasks.

There are positive signs that challenge this common narrative, of course, and there are a number of firms already treating service as their unique selling point – using it to win and retain business. This is particularly important in a soft market, where price is no longer the differentiator it used to be.

With Consumer Duty sharpening the focus on fair value and good outcomes, now is the time to raise the service bar across the industry.

Service is not a soft metric or a compliance tick box exercise. It is a commercial driver – and the cost of getting it wrong is higher than many still realise.