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Complaints to the UK Financial Ombudsman relating to motor and buildings insurance have surged this year, as delays in claim settlements fuel growing public discontent over ballooning premiums.
The Financial Ombudsman received 3,869 complaints about car and motorcycle insurance between April and June. The figure was up from 2,524 in the same period last year and a more than 50 per cent year-on-year increase, according to data released by the Financial Ombudsman Service.
The surge in complaints comes amid growing public concern about rising premiums. The average annual car insurance premium reached 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 motor insurance was competitively priced but the rising costs of repairs, energy, labour and replacement parts had made this “increasingly challenging.”
The trade body also said that it was “concerned” about the surge in complaints and it would work with its members to learn from upheld complaints.
The rise in motor insurance-related complaints was driven by a 90 per cent jump in cases about delays in claims as well as complaints linked to claim values and declined claims, the Ombudsman said. A lack of contractor availability as well as difficulties to source material had also hit the speed of repairs, it added.
“Having the right insurance is fundamental and should offer people the peace of mind that, when things go wrong, they’re protected,” said Abby Thomas, chief executive and chief ombudsman at the Financial Ombudsman Service. “Where these complaints are driven by insurers delaying paying out on claims that’s unacceptable.”
The car insurance sector has been 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 lower than 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 £30mn refunding customers it overcharged for home and motor cover.
The number of complaints related to building insurance rose to 1,776 cases at the start of the financial year, compared with 1,642 in the same period last year. Travel insurance cases, meanwhile, more than doubled since last year to 1,101, the highest figure for travel insurance complaints in more than a decade.
Rachel Lam, the Ombudsman insurance director, said travel confidence was growing after the Covid-19 pandemic that brought the sector to a halt, but insurers needed to behave responsibly as it continued to rebound.
Alongside complaints about insurance, the other most complained about products in this quarter were current accounts, credit cards and hire purchase (motor). Complaints about all these products have increased year-on-year.
Car and motorcycle insurance cases represented 36 per cent of all complaints to the Ombudsman in the first quarter of the financial year, compared with 29 per cent over the same period last year. Buildings insurance complaints, meanwhile, represented 40 per cent of all claims over the period.