The upheld rate is ‘back above pre-pandemic levels’ in a concerning turn for the sector

The Financial Ombudsman Service (FOS) received 19,346 new general insurance or pure protection complaints in H2 2022, according to the body’s latest complaints data, published yesterday (22 March 2023).

The figures revealed that the number of new general insurance complaints increased by 1,816 between 1 July and 31 December 2022 – up from 17,530 in H1.

The FOS is an independent organisation that helps to settle disputes between consumers and financial businesses. Its role is to provide an impartial and free service to help resolve complaints that consumers have been unable to resolve with their financial service provider, including insurers.

Speaking exclusively to Insurance Times, Insurance DataLab co-founder Matt Scott said the “growing number of insurance-related complaints being referred to the ombudsman” at a time when the FCA is implementing Consumer Duty is a “worry for the industry”.

Considering specific firms, the FOS’ latest data showed that Aviva Insurance received 1,079 new case complaints – 29% of which were found in favour of the consumer.

Admiral Insurance (Gibraltar) and Admiral Insurance Company, on the other hand, received 521 and 539 new case complaints respectively.

Cases ruled in favour of the complainant for Admiral Insurance (Gibraltar) sat at 27%, which reduced to 25% for Admiral Insurance Company.

Direct Line Group’s U K Insurance, furthermore, recieved 949 new complaints – of which 19% were upheld. 

Working ‘smarter’

Additional analysis conducted by Insurance DataLab highlighted that the general insurance upheld rate rose by three percentage points in Q4 2022 – this is now the third-highest quarterly upheld rate in the last three years, since its peak in June 2021.

Scott further noted that the “rising upheld rate” – which is “now back above pre-pandemic levels” – should be of “concern” to the sector.

The upheld rate refers to the proportion of complaints received that were found to be legitimate. 

Complaints concerning claims were upheld in favour of the consumer at a rate of 63%. Admin complaints were upheld at 33% and sales or advice complaints were upheld at 3%.

FOS Upheld Rate, Insurance DataLab

Scott said: “Too many consumers still fail to understand what is and isn’t covered under their policy and that is always going to lead to a poor customer outcome when it comes to making a claim.

“Insurers need to work harder and smarter to ensure that their customers fully understand their policies at the point of quote – even if that means slowing down the quote process.

“This may seem counter-intuitive at a time when everyone seems to be asking fewer questions and trying to speed up the process, but by taking time to properly explain any limits and exclusions, insurers can ensure that their policyholders know exactly what it is they are buying.”

Scott noted this was “particularly important, given the rise in the number of essentials products in the market”.

Insurance Times requested further comment from the FOS, but the body declined to discuss specific firms.

Overall, the FOS received 79,921 new complaints – compared to 72,978 in H1 2022.

Around 34% of complaints were resolved, compared to 37% in H1 2022.

Complaints concerning the general insurance sector included cases related to payment protection insurance (PPI) – an area that was not previously considered by the FOS.