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Are insurers giving customers who complain the brush-off?
New data suggests increasing numbers of valid complaints are rejected
Most of us don't relish complaining – but hundreds of thousands of insurance customers felt compelled to last year.
The latest data from the Financial Conduct Authority (FCA) shows there were 753,859 insurance complaints between July and December 2023 – but in the past two years, there's been a decline in the rate at which insurers admit to being in the wrong.
During this same period, the Financial Ombudsman Service (FOS), which gets involved when customers aren't satisfied with how their insurer addressed their complaint , has been receiving more complaints and increasingly finding fault with insurers.
This suggests policyholders with legitimate grievances are increasingly having to escalate their complaint for the correct outcome – a process that can take several months. Here, Which? combs through the latest data and shows you how to complain effectively.
Fewer complaints upheld by insurers
If something goes wrong between you and your insurer, your first official recourse is to complain to the firm.
On receiving a complaint, the company has eight weeks to investigate the matter internally and – if it finds fault – to propose actions to set things right. This could include an offer of compensation, re-examining a claims decision or making an apology.
Complaining is worth doing. The majority of customers who do so have their complaints 'upheld' (meaning the insurer accepts some degree of blame). In the second half of 2023, this was the outcome with 58% of complaints.
However, as the chart shows, this is becoming less common. In the six months prior, 62% of complaints were upheld – and the year before that, 66%.
Insurance complaints upheld by the insurers and the FOS
... but FOS upholding more complaints
If you're still in dispute with a company after eight weeks, you can turn to the FOS.
The free-to-use service investigates the dispute and ultimately makes a ruling. If it upholds your complaint, it will tell the business what it must do to rectify the problem. The FOS has statutory powers, which means that once it's reached a ruling, the business must do what it says.
According to FOS data, the numbers of complaints it has received about insurers have been rising. They're up by a fifth in the year up to late 2023.
Yet while insurers seem to have been brushing off more complaints, the FOS figures show it's been increasingly prone to taking the customer's side. In early 2022, it found fault with insurers in 28% of complaints. By late 2023, this figure had risen to 37% – the highest in five years.
Where the FOS is finding the most fault
The FOS is upholding more complaints across a variety of insurance products.
In its latest quarterly data – reflecting October-December 2023 – looking at some of the most widely sold forms of insurance, the FOS found most fault with travel insurers: 44% of complaints were upheld. Meanwhile, car insurance and buildings insurance have both seen notable increases (10 percentage points) since last year.
| Insurance type | 2024 uphold rate | 2023 uphold rate |
|---|---|---|
| Travel insurance | 44% | 37% |
| Buildings insurance | 43% | 33% |
| Car/motorcycle insurance | 39% | 29% |
The FOS isn't a replacement for poor complaints service
While the trends suggest increasing numbers of customers rebuffed by insurers are ultimately prevailing with the FOS, it's no replacement for the insurer dealing reasonably with the complaint to begin with.
Insurers process almost half of complaints made to them within three days – and only 6% take longer than eight weeks.
However, if you're not satisfied with the insurer's answer and take the matter to the FOS, you can then expect a further wait of two to three months before your case will even be allocated for investigation. And with delays in service being one of the key reasons insurance customers complain to start with, it's likely many lose heart at the prospect of further waits and give up – even if optimistic about the chances of the FOS ruling in their favour.
The FCA has recently flagged areas of poor practice that have surfaced in complaints. In March, it censured car insurers after a review in which it found some insurers offering unfairly low cash settlements in claims involving written-off or stolen cars.
When we asked the FCA about the general complaints trends, it said: 'We monitor the levels of complaints closely and we have already taken action where we've identified issues including on claims handling, poor value products and written-off vehicle valuations. We expect all insurance firms to handle any complaints promptly and fairly and deliver good consumer outcomes, in line with the Consumer Duty.'
The Consumer Duty is regulation brought in last July, requiring firms to put customers at the heart of their business.
We also spoke to the Association of British Insurers (ABI) – the industry trade body. Commenting on the figures, the ABI told us: 'Insurers are committed to supporting their customers and providing exceptional customer service. They will always try to deal with complaints as efficiently and fairly as possible. When complaints are passed to the FOS, we and our member [the insurer] will work with them to understand where any learnings can be made.'
- Find out more: car and home insurers rated for claims service by their customers
How to complain about your insurance
According to the FCA, a complaint is an expression of dissatisfaction about how a firm has provided (or failed to provide) a financial service – where this has resulted in financial loss, material distress or material inconvenience.
If you're unhappy with how your insurer has treated you, it's worth making a complaint. Follow our four tips below to help achieve the best result.
1. Complain in writing
Complaints can be made orally, but doing so in writing makes it clear that you want the company to treat the issue formally. It also starts a paper trail, which is useful if the insurer doesn't respond to you within eight weeks.
If the insurer has a complaints team, write to them, and ask them to write back to you to confirm they've received your complaint.
2. Be clear and polite
If you're stressed or upset, this isn't always easy (and can be another reason why complaining in writing might be preferable) – but do your best to be as polite, clear and constructive as you can.
Explain where the insurer has failed to meet your expectations – being as specific as possible about what's gone wrong. And try to set out what you would like the insurer to do or change as a result.
3. Ask questions
The insurer should also be clear in its communications with you – so if you're confused by anything it tells you, don't be worried about asking it to explain things you've not understood.
4. Final response letter
Within an eight-week period, you should receive a Final Response Letter that concludes the complaints process with the insurer. In a minority of cases there may be a delay – but here, the insurer should give you prior notice explaining why it won't meet the deadline.
The Final Response Letter should set out the insurer's position, having investigated your complaint. This should give some detail about its understanding of the situation, what it's done to investigate, and – ultimately – whether and how it will act. It should also contain information about how to escalate your complaint to the FOS.
If you're dissatisfied with the response (even if the complaint has been upheld), you can go to the FOS. You can also go to it if the insurer failed to respond to your complaint. You can find information about its service on its website or call its enquiries line on 0800 023 4567.
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