Car and buildings insurance complaints hit five-year high – what were most disputes about?

Complaints about car and buildings insurance have reached their highest level since 2018-19, according to new quarterly data from the Financial Ombudsman Service (FOS).

The FOS, a free service set up to resolve customer complaints about financial businesses, reported a 36% year-on-year rise in the number of grievances it received about these types of cover. The number of complaints upheld by the ombudsman was also up, with the FOS finding fault with travel insurance firms in particular.

Here, Which? digs into the data to find out what people's main gripes were over the last year and how the FOS can help you if you have an unresolved dispute.

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Rise in complaints about insurance

Out of the 43,953 complaints the FOS received between 1 April and 30 June 2023, there was a combined total of 5,645 complaints about car and buildings insurance. That's up from 4,166 in the first quarter of 2022-23 and a 45% jump since 2019-20 when the FOS received 3,901 grievances over the same three-month period.

Car and motorcycle insurance was the third most complained about product overall between April and June this year, after current accounts and credit cards. Buildings insurance was the fifth.

There was also a huge leap in the number of complaints about travel insurance – from 504 complaints in Q1 2022-23 to 1,101 in the same quarter this year. That’s the highest first-quarter figure for travel insurance complaints in more than a decade.

FOS finds fault with more firms

The uphold rate (when an ombudsman rules in the customer's favour) for complaints has also leapt. The number of car insurance complaints upheld by the FOS increased from 29% in the first quarter of 2022-23 to 36% this year. While the uphold rate for building insurance complaints rose from 31% to 40%.

Travel insurance complaints upheld by the FOS also rocketed from 33% to 44%. 

The figures show that not only are more people making complaints, but firms are increasingly being found to be in the wrong. 

It comes after the Financial Conduct Authority (FCA) warned insurers about their obligation to provide support to struggling customers and follows news that Direct Line Group overcharged some car and home insurance renewal customers, despite the FCA's 'loyalty ban' introduced in January 2022. 

• Find out more: best and worst car insurance companies

What were the complaints about?

The majority of complaints about car and motorcycle insurance were about delays to claims being paid out - up 90% on the first quarter of last year. Contractor availability has also impacted on the speed of repairs, as has the ability to source materials. 

Other consumers complained about the value of a claim and claims being declined altogether, as well as grievances about administration and customer service issues. 

The increase in complaints about building insurance is also due to a rise in disputes about claim delays.

The main travel insurance issues being complained about are again claims being either declined or delayed. The FOS told Which? that higher general awareness of travel insurance post-pandemic may have led to an increase in the sales of policies, which in turn could have led to an increase in cases coming to their service.

More people travelling after Covid restrictions were lifted is also likely to have had an impact on the number of cases during the first quarter of 2022-23 compared to this year.

• Find out more: when to take a complaint to the ombudsman 

'Extremely concerning'

Rocio Concha, Which? Director of Policy and Advocacy, said:  'At a time when the cost of some types of insurance are at record highs, it's extremely concerning to see an increase in complaints made to, and uphold rates in favour of the consumer by, the Financial Ombudsman Service. 

'Buying car insurance is a legal requirement for motorists, yet Which? research has found that customers are not only having to chase their provider over claims, but over three-quarters of car insurance customers reported they were not given an explanation by their insurer for rejected, partially accepted or disputed claims.

'While the Financial Conduct Authority's new Consumer Duty should help to make firms raise their game when it comes to providing adequate customer service, with easy-to-understand terms and conditions, insurers have been subject to higher standards for almost two years now. That some are struggling to provide appropriate support to their customers is worrying - and the regulator must be ready to take tough action against companies falling below the required standards.' 

How to complain to the FOS

Before you take any complaint to the FOS, you should always try to resolve the dispute with the company first. Follow its complaints procedure, and clearly explain the problem and what you want done about it.

If you've had no joy after eight weeks, then you should ask the company for a ‘final response’ to show you've done all you can to resolve the complaint. If the firm fails to respond within a couple of weeks, then the next step is to go to the FOS. 

Making a complaint to the FOS is pretty simple – just visit the ombudsman's website and fill in a short online form, including as much evidence as you can.

After considering all the evidence, the FOS will write to you and the company with the decision and if there is to be an 'award'. If your complaint is upheld, then this letter will include details of what the company must do to put things right.

Can you appeal the decision?

While the award is legally binding for the company, that's not the case for the customer. If they therefore choose not to accept the ombudsman's decision, they are free to take legal action through the courts instead.

Abby Thomas, chief executive and chief ombudsman of the Financial Ombudsman Service, said: 'Over the past year, the Financial Ombudsman Service continued to help hundreds of thousands of customers who had problems with financial businesses on issues across banking, lending, insurance and investments. 

'If consumers have problems with their financial provider, they can come to our service with confidence that we’ll resolve their complaint fairly and impartially.'

• Find out more: how to complain to the Financial Ombudsman Service

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