Insurance DataLab takes a deep dive into the customer experience provided by personal lines insurers and brokers – which organisations have excelled across the analysis’ four service metrics?
The UK personal lines market has undergone significant change over the last year, with new regulations and changing customer behaviour all affecting the way business is conducted across the industry.
Chief among these changes has been the introduction of new general insurance pricing practices – fully effective from January 2022 – which, alongside the FCA’s concept of fair value, forms the regulatory framework that underpins this marketplace.
These new regulations mean that insurers and brokers are no longer able to offer cheaper rates to win new business – they must instead offer the same price to both renewing and new customers.
This change is already having a significant impact on pricing.
Between January and May 2022, new business rates for motor insurance have grown by 8%, while home insurance premiums rose by 11% between January and April 2022, according to market research firm Consumer Intelligence.
The FCA’s ban on price walking also means that customers are no longer able to find cheaper premiums at rival firms to their current insurance provider, meaning that customer experience and product value have suddenly become much more important than in previous years.
It is therefore encouraging to see that Insurance DataLab’s exclusive analysis of customer experience in the personal lines market has revealed an uptick in performance across the industry.
Indeed, the average Insurance DataLab customer experience rating has risen to 69% for 2022 – an improvement of six percentage points on 2021’s score, when the average customer experience rating stood at 63%.
Claims performance boosts overall rating
Of the four metrics that make up the Insurance DataLab customer experience rating – claims, complaints, customer satisfaction and transparency – the 20 personal lines providers evaluated in this analysis were rated highest for their claims performance.
These insurers and brokers picked up an average claims experience score of 82% for 2022. All but five of the providers in this research received a score greater than 80% for this metric, with none falling below 70%.
This high score was underpinned by a particularly strong performance in Consumer Intelligence’s claims satisfaction analysis – this contributed to home insurance providers picking up an average claims rating of 84.1% from Insurance DataLab.
Motor insurers and brokers performed marginally better, receiving an average score of 84.2%.
While only seven of the insurers included in this analysis received a score under the third and final element that makes up Insurance DataLab’s claims rating – the results from Insurance Times’ Five Star Rating Report: Personal Lines 2022, which is based on broker feedback – this showed that claims has still been an area of strong performance this year.
Based on this specific measure, the insurers in this analysis received an average score of 77% from brokers for 2022 – this is the same score that last year’s cohort of insurers received, indicating a steady performance.
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Customer satisfaction dip
Despite insurers’ claims performance showcasing solid results in this analysis, Insurance DataLab found that its customer satisfaction metric was at the other end of the scale.
Of the four components that make up its customer experience rating, customer satisfaction received the lowest overall score for 2022.
This maybe should not be a total surprise given how few insureds end up making a claim on their policy, so have not subsequently benefited from a positive claims experience.
The insurers and brokers in this analysis received an average customer satisfaction rating of 61%.
This consists of an average Trustpilot score of 82% – up from 77% last year – and an average trust and happiness rating from Fairer Finance of 56%, up from 54%.
This year also saw the introduction of Consumer Intelligence’s Net Promoter Score (NPS) into Insurance DataLab’s analysis, to make up the third element of the customer satisfaction rating.
Insurers and brokers alike performed relatively poorly on this measure, with an average NPS of just 1.97 – this equates to a standardised score of 45% and was a major contributor to customer satisfaction receiving the lowest rating across all four pillars of this analysis.
Motor providers did, however, perform slightly better than their home insurance counterparts, with these firms receiving an average NPS of 2.5, compared to 1.9 for home insurance providers.
The third pillar of Insurance DataLab’s customer experience rating is transparency, which is based on Fairer Finance’s assessment of the pre-purchase user journey.
The average score under this metric for 2022 is 65% - a significant improvement on last year’s 51% as the insurance industry continues to improve the transparency of its products in the wake of the FCA’s fair value regulations.
Complaints handling continues to improve
The final pillar of Insurance DataLab’s customer experience rating is complaints handling.
The methodology has once again been updated compared to previous years, with the introduction of data from the FCA revealing complaints per 1,000 policies.
This regulatory data highlighted that the insurers and brokers in this analysis received an average of 3.42 complaints per 1,000 policies over the course of 2021, compared to 5.28 for the previous year.
Despite this reduction in overall complaints, there is still a recorded deterioration when it comes to the upheld rate – the proportion of complaints that are referred to the Financial Ombudsman Service (FOS) and were upheld in favour of the customer.
Over the course of 2021, the FOS found in favour of the customer an average 27% of the time for the providers in this analysis, up from 25% compared to last year’s cohort of providers.
These two elements combined to give this year’s providers an average Insurance DataLab complaints rating of 67% for 2022.
Insurers take the lead
Brokers have been the standout performers in this analysis in previous years, outscoring their insurer counterparts by at least three percentage points in each of the last three years of Insurance DataLab’s analysis.
That gap has been closing, however, and this year, insurers have taken the lead for the first time, with an average Insurance DataLab customer experience rating of 70% - up eight percentage points on 2021’s result.
This means that with the average broker customer experience rating climbing by just one percentage point to 66% for 2022, insurers are now outscoring brokers by four percentage points.
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The difference in performance is most marked when it comes to complaints handling. Insurers picked up an average complaints rating of 70% this year, while brokers managed an average score of just 57% for 2022.
This compares to average scores of 59% and 51% respectively in 2021.
However, it is important to bear in mind that the change of methodology to take FCA complaints data into account in this year’s analysis will have contributed in some part to this switch of scores.
Most of the difference in performance for the complaints handling metric comes from the complaints per 1,000 policies in force data – the upheld rates stayed remarkably similar between insurers and brokers, at 27% and 28% respectively.
Brokers, however, received 6.58 complaints per 1,000 policies sold, compared to just 2.37 complaints for the insurers in this analysis.
The second biggest difference came under Insurance DataLab’s customer satisfaction metric - although insurers only outscored brokers by three percentage points in this measure, with an average customer satisfaction rating of 62% for 2022, compared to 59% for brokers.
This was largely driven by a lower average NPS for the brokers in this analysis, which stood at -5.0 compared to a much more favourable 4.5 for insurers.
Interestingly, brokers outperformed insurers in terms of ratings gained through Trustpilot, picking up an average score of 88% this year, compared to 80% for the insurers included in this analysis.
Meanwhile, average claims ratings were similar across both types of companies, with insurers receiving a 2022 score of 82% and brokers recording an 81% score.
When it comes to transparency of the pre-purchase user journey, however, there was nothing to separate insurers from their broker counterparts, with both categories of firms picking up a score of 65% for 2022.
Six of the best customer-centric firms
Insurance DataLab’s research also named the best personal lines insurance providers for customer experience, with NFU Mutual rising to the top of 2022’s listings after a sharp uptick in performance.
The insurer, which has been awarded a Gold Award for its performance by Insurance DataLab, earned an overall customer experience rating of 79% for 2022, up 10 percentage points on 2021 when the insurer finished seventh with a score of 69%.
Its 2022 score is also a significant improvement on the 61% rating the insurer received in 2020.
This means that the mutual insurer has outperformed the market average by an impressive 10 percentage points, leapfrogging inaugural top-rated insurer LV= in the process.
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Indeed, NFU Mutual’s performance has been so impressive that it topped the table across three of Insurance DataLab’s four customer experience metrics, only missing out on the top spot for complaints handling – for this measure, it finished seven percentage points below the average complaints rating with a score of 60%.
This is six percentage points lower than the 66% complaints rating it received in 2021. Meanwhile, NFU Mutual’s upheld rate – the number of cases which the FOS finds in favour of the customer – climbed 13 percentage points for 2022 to 35%, up from 22% in last year’s analysis.
Second overall in Insurance DataLab’s customer experience listing is Covéa Insurance, with a customer experience rating of 75% for this year – up from its 71% score last year, when it finished in fourth place.
The insurer performed particularly strongly within the claims metric, picking up an 89% rating for 2022 – the second highest in this analysis. It also finished second for customer satisfaction and third for complaints handling, with scores of 74% and 79% respectively.
Improved performances from NFU Mutual and Covéa Insurance mean that LV= has slipped into third spot overall – the insurer experienced a slight dip in its score to 73%, down from 74% for 2021.
The final three customer experience Gold Award winners for 2022 have all performed equally well, with RAC Group, Saga Group and Markerstudy Group all picking up an overall customer experience rating of just under 73%.
While all three are new winners of Insurance DataLab’s Gold Award, Markerstudy Group does have pedigree in this area after its January 2022 acquisition of Budget, which picked up a Gold Award in 2021 with a customer experience score of 71%.
Saga Group – another new entrant for 2022 – performed particularly strongly under Insurance DataLab’s claims metric, with a score of 87%. This is five percentage points higher than the market average and the second highest score of all 20 providers covered in this research.
RAC Group, meanwhile, ranked highly for the transparency of its pre-purchase user journey, with a score of 72%. This is the second highest score for this metric in this analysis and eight percentage points higher than its 2021 transparency score of 64%.
The insurance group has also seen an improvement in its complaints handling - RAC’s FOS upheld rate fell 18 percentage points to 26% for 2022, down from 44% in last year’s analysis.
These improvements resulted in a 14% increase in the group’s overall rating – it finished in 17th place in 2021 with a below average score of 59%.
Performance metrics used for this analysis have been calculated across four pillars, to assess customer experience across the main elements of the customer journey in insurance.
Claims: The claims metric is based on Consumer Intelligence’s claims satisfaction scores – this is based on surveyed policyholders who had made a claim on their home or motor insurance policy during 2020 and 2021.
This claims metric also incorporates the claims element of Insurance Times’ Five Star Rating Reports, which are based on how brokers rate their insurer partners across a number of different service areas.
Complaints: The complaints metric is based on Insurance DataLab’s own analysis of regulatory and ombudsman complaints figures.
This includes the number of complaints per every 1,000 policies sold, as reported to the FCA, as well as the upheld rate for complaints referred to the Financial Ombudsman Service.
Customer satisfaction: The customer satisfaction metric is based on the trust and happiness element of Fairer Finance’s own customer experience ratings, as well as the Consumer Intelligence’s Net Promoter Score for home and motor insurance.
The metric also incorporates customer reviews in the form of the Trustpilot TrustScore, which indicates the overall measurement of reviewer satisfaction.
Transparency: The transparency metric is based on Fairer Finance’s analysis of the pre-purchase user journey for each of the brands discussed in this article.
Full details of how these metrics have been calculated, as well as a summary of the data, can be found at www.insurancedatalab.com.