Complaints to the UK’s Financial Ombudsman Service about motor and buildings insurance have soared this year, as delays in settling claims fuel growing public discontent about spiralling premiums.
The Financial Ombudsman received 3,869 complaints about car and motorcycle insurance between April and June. The figure is up from 2,524 in the same period last year and represents an increase of more than 50 per cent year-on-year, according to data released by the Financial Ombudsman Service.
The rise in complaints comes amid growing public concern about rising premiums. The average annual car insurance premium hit a record £776 in the second quarter of 2023, according to confused.com’s car insurance price index, 40 per cent higher than a year earlier.
The Association of British Insurers said insurers were determined to ensure car insurance was competitively priced, but the rising costs of repairs, energy, labour and parts had made this “increasingly difficult”.
The trade body also said it was “concerned” about the rise in complaints and would work with its members to learn from upheld complaints.
The rise in complaints about motor insurance was driven by a 90 per cent increase in cases about claims delays, as well as complaints about claim values and rejected claims, the ombudsman said. A lack of availability of tradesmen and difficulties in obtaining materials had also affected the speed of repairs, he added.
“Having the right insurance is fundamental and should give people peace of mind that they’re protected when things go wrong,” said Abby Thomas, chief executive and chief ombudsman at the Financial Ombudsman Service. “If these complaints are caused by insurers delaying paying claims, that’s unacceptable.”
The car insurance sector has come under regulatory scrutiny in recent years. The Financial Conduct Authority said last December that it had seen evidence that motor insurance customers whose cars had been written off in a crash had received payouts below fair market value.
In June, the regulator ordered Direct Line to review claims paid out between 2017 and 2022. This month, the motor insurer said it would spend £30m refunding customers it had overcharged for home and motor insurance.
Complaints relating to home insurance rose to 1,776 at the beginning of the financial year, compared to 1,642 in the same period last year. Meanwhile, travel insurance cases have more than doubled since last year to 1,101, the highest number of travel insurance complaints in more than a decade.
Rachel Lam, the ombudsman’s director of insurance, said confidence in travel was growing after the Covid-19 pandemic brought the sector to a standstill, but insurers needed to act responsibly as the sector continued to recover.
As well as complaints about insurance, the other most complained about products this quarter were current accounts, credit cards and hire purchase (cars). Complaints about all these products increased compared to last year.
Car and motorcycle insurance cases accounted for 36% of all complaints to the Ombudsman in the first quarter of the financial year, compared with 29% in the same period last year. Complaints about home insurance accounted for 40 per cent of all complaints during the period.
