More for less: Home insurance customers frustrated by worsening service as premiums soar, Which? finds
Which? is calling on the Financial Conduct Authority (FCA) to take decisive action against home insurers failing to meet standards, amid growing concerns over claims handling and rising premiums.
A survey of over 1,500 home insurance policyholders found that around four in 10 (44%) claimants had to chase their insurer to progress their claim. Concerningly, around a third (34%) expressed regret about making their claim in the first place.
The report comes two months after the consumer champion found that almost half (48%) of all people making a claim across home, travel, motor and pet insurance encounter at least one problem during their claim journey.1
Despite these issues, premiums have been steadily climbing, with sales data published by Go.Compare revealing a 31 per cent increase in the average cost of combined buildings and contents cover over the past year, reaching £241 between April and June this year.
Which?’s survey revealed a concerning gap between escalating prices and muted satisfaction. Two-thirds (64%) of respondents reported higher premiums at renewal and one in 10 (11%) experienced an increase they felt to be ‘significant’. LV, More Than and Policy Expert were among the insurers with the highest proportions of customers facing these steep hikes. 85 per cent of claimants with LV said their premium had increased, 76 per cent of those with More Than, and 78 per cent of customers with Policy Expert.
The average customer score in the survey was just 65 per cent, with scores ranging from 59 per cent (TSB) to 70 per cent (Axa). For the first time since the Which? Recommended Provider (WRP) endorsement launched in 2010, no provider met the criteria to be named a WRP. Axa narrowly met the minimum customer score of 70 per cent but was not awarded WRP status due to limitations in its standard policy coverage.
The findings highlight a range of concerning indicators from both regulators and the industry, including rising premiums, decreasing claims acceptance rates2 and record complaints3 as potential drivers of reduced satisfaction in the home insurance sector. Many respondents cited poor value for money as a major factor behind their dissatisfaction. Eight out of 20 brands rated by claimants in our analysis for their claims service also received two out of five stars for the settlement value of their claims.
Insurers have attributed recent price hikes to escalating claims costs, with the industry paying out a record £1.4 billion on property claims between April and June, up from £782 million in the same period last year, according to the Association of British Insurers (ABI).5 Extreme weather conditions, including heatwaves and droughts, have driven subsidence claims to a record £60 million.
The FCA is currently reviewing insurers' claims-handling practices, which the consumer group believes will mark a big test of the regulator's Consumer Duty. The FCA has made clear that insurers should already have been meeting many parts of the Duty based on longstanding requirements, and that the introduction of the Duty should have been a less significant change than for other parts of the financial services sector. Which? is urging the FCA to address issues with how firms are handling claims, and to take tough action against any firms falling short of required standards.
The consumer champion’s campaign to end the insurance rip-off is also calling for the regulator to clamp down on car and home insurers charging customers who pay monthly excessively high interest rates.
Rocio Concha, Which? Director of Policy and Advocacy, said:
“Our research exposes a troubling disconnect between what customers are paying for home insurance and the service they receive.
“It’s clear that many insurers are falling short in supporting customers when they need them most, resulting in declining satisfaction and record complaints. These practices are unacceptable, especially as premiums continue to soar.
“It’s time for the FCA to hold insurers accountable and ensure that firms treat their customers properly if they make a claim and provide fair value.”
-ENDS-
Notes to Editors
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1Consumer harm in the insurance process' paper published in July
2General insurance value measures data 2023
3Buildings insurance complaints hit a 10-year high
5Property insurance payouts hit record quarterly high
Research
In June and July 2024, Which? surveyed 1,678 home insurance policyholders (1,507 members of the public and 171 members of our Which? Connect panel) who own home insurance and have claimed in the past two years. Customer scores represent claimants’ overall satisfaction and likelihood to recommend their insurer.
No provider achieved Which? Recommended Provider status.
11 policies were awarded Which? Best Buy status.
Comments
A Policy Expert spokesperson said: "This survey features responses from only 36 claimants from the last two financial years, which is in no way representative of almost 225,000 claims and over 2m policies renewed with us over the same period. We prioritise settling claims quickly and efficiently, to keep costs low and pass these savings on to customers. We care about our customers and monitor their feedback to help us improve our customer experience.
"We’ve been voted the UK's No. 1 home insurance provider on Reviewcentre.com for 10 years running, our Trustpilot score of 4.5 ranks meaningfully better than most other insurance providers, and 85% of customers choose to renew with us every year. We pride ourselves on providing best in class customer service while also providing low-cost insurance to more than 1.5 million policyholders."
About Which?
Which? is the UK’s consumer champion, here to make life simpler, fairer and safer for everyone. Our research gets to the heart of consumer issues, our advice is impartial, and our rigorous product tests lead to expert recommendations. We’re the independent consumer voice that influences politicians and lawmakers, investigates, holds businesses to account and makes change happen. As an organisation we’re not for profit and all for making consumers more powerful.
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