Insurance DataLab analyses the latest ombudsman complaints data to find out which product lines – and which insurers – are receiving the most complaints from consumers

There have been more than 200,000 general insurance complaints referred to the Financial Ombudsman Service (FOS) over the last five years, with the number of quarterly referrals rising by almost 25% over that period.

Motor insurance continued to be the most complained about business line in UKGI, according to the latest figures from the Financial Ombudsman Service (FOS), which were obtained via an Insurance DataLab freedom of information request.

Analysis by market intelligence platform Insurance DataLab found that more than 33,500 complaints about car and motorcycle insurance products have been referred to the FOS over the five years to the end of June 2023.

This accounts for a third of all general insurance complaints over that period, more than double any other business line in the industry.

Indeed, motor insurance has been the most complained about business line across each quarter of the last five years but one, with a Covid-19 hit travel insurance market topping the table in the final quarter of 2020.

The volume of travel insurance complaints almost quadrupled over the course of 2020 in the first year of the pandemic.

Travel insurance referrals rose to a high of almost 2,600 in the third quarter of the year, before falling back to pre-pandemic levels over subsequent quarters.

On the rise

Recent quarters, however, have seen a rise in complaints across many business lines and travel is no exception, with travel insurance-related complaints rising to more than 1,000 for the first time since the pandemic in each of the last three quarters of this analysis.

Indeed, travel insurance has seen the biggest year-on-year increase in complaints during Q2 2023, with referrals to the FOS rising by more than 123%.

Motor and home insurance have also seen a big uptick in complaints, with each business line experiencing a 44% year-on-year increase over the second quarter of the year.

This means that motor insurance complaints volumes are now well above pre-pandemic levels, with the first two quarters of the year representing the two highest quarters across the entirety of the last five years.

Across all business lines, overall complaints referrals rose by 39% over Q2 2023, making it four consecutive quarters of rising complaints volumes – the first sustained period of increased referrals since the pandemic.

Claims challenges persist

The majority of insurance complaints continue to relate to the claims function, with some 79% of all complaints over the last five years relating to the claims process in one form or another.

This proportion has been on the rise too, with some 81% of complaints across 2022/23 relating to the claims process, compared to 76% in 2017/18.

And it is the claims process that has been the biggest driver of rising complaints across the industry. This includes a rise in insurers delaying in paying out on claims, as well as the availability of contractors impacting the speed of repairs and the ability to source materials.

Abby Thomas, chief executive and chief ombudsman at the FOS, said insurers need to do better.

“Whether it’s your car, your holiday or your home, having the right insurance is fundamental and should offer people the peace of mind that, when things go wrong, they’re protected,” she said.

“Where these complaints are driven by insurers delaying paying out on claims, that’s unacceptable.

“We expect insurers – as well as other businesses – to treat their customers fairly and in a timely manner.”

This rise in complaints volumes will be of concern to the industry, particularly with the new Consumer Duty and Fair Value regulations increasing the regulatory spotlight on customer outcomes.

The biggest test of complaints performance, however, is not overall volumes of referrals but the proportion that are found in favour of the customer, otherwise known as the upheld rate.

And the bad news for insurers is that this is also on the rise, with all of the five most complained about business lines experiencing an increase in upheld rates in recent quarters.

Of these lines, home emergency cover has the highest upheld rate at 44% for the second quarter of 2023, slightly higher than travel insurance at 43.5%.

Worryingly, three of the five most complained about business lines had an upheld rate over this period of 40% or greater, with all five business lines having an upheld rate of more than 30%.

In fact, only three business lines across UKGI had an upheld rate of less than 30% in Q2 2023 – business protection insurance (28.0%), legal expenses insurance (22.0%), and private medical and dental insurance (13.8%).

The business line with the highest upheld rate, meanwhile, was special event insurance, with some 55% of complaints upheld in favour of the customer.

But what of individual insurers? How have they been faring?

Chart toppers

Insurance DataLab’s analysis found that Direct Line Group (DLG) was the most complained about insurer in UKGI, having more than 14,800 complaints referred to the FOS over the course of the last five years.

Axa and Aviva were the only two other insurers to receive more than 10,000 complaints over that period, with both receiving a little under 11,800 complaints, while Admiral (8,900) and RSA (8,850) rounded off the top five.

The dominance of motor insurance in DLG’s book of business – it accounted for some 53% of premiums in 2022, making it the third largest motor insurer in the UK behind Aviva and Admiral – should mean it is no surprise that motor insurance is the most complained about of the insurer’s product lines.

The insurer had almost 6,400 motor complaints referred to the ombudsman over the last five years, accounting for some 43% of overall complaints about the insurer.

But while DLG is the most complained about insurer over the whole of this analysis period, it is Admiral that has claimed that unfortunate title in each of the last three quarters.

The insurer had almost 900 complaints referred to the ombudsman in Q2 2023, making it the busiest quarter of the last five years and some 130% higher than the same period a year earlier.

Admiral was also the only insurer of the five to have more complaints referred to the FOS in Q2 2023 than in the first three months of the year.

Some 85% of the insurer’s complaints related to motor insurance – the highest proportion across all five of the most complained about insurers.

And with the motor insurance industry continuing to face a number of different pressures, from rampant claims inflation to overstretched supply chains, we could well see motor insurers continuing to face a large number of complaints over the coming months and years.

But with the regulator keeping a close eye on complaints performance as part of its oversight of Consumer Duty and Fair Value, all insurers must be wary of falling foul of expectations.