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Amidst increasing insurance mistrust, customer relationships suffer

7 May 2024

Written by Simon England

|  5 Minutes

Over the past several years, Brits have witnessed a steep increase in the price of motor insurance by up to 70% and other products such as home insurance by around 30%. While, there are explanations such as increased overhead costs, labour and the cost of car parts, it’s challenging to believe that insurance companies are offering fair value. Trust in car insurers is at an all-time low

Despite a profitable couple of years during the pandemic, inflation and lagging premiums resulted in the worst financial year for car insurance providers in 2022-23. The inflated prices in 2023-24 mostly offset these losses. However, Admiral Group plc made record profits, despite losing customers. Meanwhile, others barely broke even. Regardless, this has had a damning effect on the consumer.

As a result of the increased cost, customers expect to receive the value to match in terms of customer service and brand experience. We asked Brits how they felt about the customer service from insurers and the results might be surprising.

Poor customer service from an insurer is the new normal

Unfortunately, in the scramble to restore falling profits, many insurers sacrificed the quality of their customer service offering. The cost of employing full-time customer support teams is a low priority for most insurers and it’s evident. A negative experience pushes already infuriated customers to switch providers at renewal for a better experience.

The motor insurance market is famously competitive, customers shop around for the best offering and often move at renewal to ensure the best deal. With this in mind, it makes sense for insurers to build authentic relationships with their customers.

Research suggests that the vast majority would rather do business with a competitor after having a poor experience with another brand. Nearly 80% backed out of a decision after receiving poor customer support.

Despite the already intense competition, customers feel the apparent lack of quality customer support within the insurance industry. We discovered that in the past year alone, 63% felt frustrated with the customer service from an insurance provider.

We discovered that in the past year alone, 63% felt frustrated with the customer service from an insurance provider.

Customer service now trumps insurance features

In an age of automation, it’s clear that customers aren’t getting the level of support they need from their insurance provider. The demand for a positive and authentic interaction with a brand is so great that users rated customer service more important than insurance features. Customer service is so powerful that it took higher priority than even reviews and website experience.

customer service more important than insurance features.

Understandably, insurance companies win new customers on price but it’s clear the key to keeping an existing customer is excellent consumer support.

A bad experience leaves a lasting impression

Despite an unbeatable price, poor customer service has more of an impact than you’d expect. A customer is more likely to leave a negative review after a poor experience with a brand than a positive review after a good experience. Furthermore, it takes 12 positive endorsements to counteract the impact of a single negative review. Unresolved customer complaints are escalated to the Financial Ombudsman Service damaging the insurer’s professional reputation.

Regardless of the upfront value of an insurance policy, if customer service misses the mark, your valuable consumers will move elsewhere. In fact, 88% of customers are unlikely to stay with an insurer who offers poor customer service with over 50% being very unlikely. Conversely, 88% are likely to stay with an insurer offering excellent customer service.

88% of customers are unlikely to stay with an insurer who offers poor customer

Customers invest a significant amount of money into motor insurance products annually, so saving money on car insurance is essential in 2024. Understandably, customers primarily shop for insurance by price. The fact that so many would risk sacrificing the best-value policy for better customer support in surprising.

Automation frustration is becoming more prevalent

Across industries, firms save on expenses by automating their customer support. This includes AI chatbots, automated email responses or redirection to Frequently Asked Questions pages; users tend to find these tactics unhelpful at best. Frustrations reach their peak when no option to speak to a human being is available. 41% are most infuriated by the inability to speak to a person over the phone.

41% are most infuriated by the inability to speak to a person over the phone.

The overwhelmingly preferred way to contact customer support is over the phone. It might surprise you how many companies fall short in the quality of their telephone customer service offering.

A lot of insurers outsource their customer calls. In these cases, staff offer barely more knowledge than the customer or recite the policy wording. Alternatively, insurers often employ staff on a wage and/or commission basis which breeds a culture of apathy and intimidating sales tactics. The resulting high staff turnover ensures a consistently inexperienced and unknowledgeable workforce – a surefire tactic to deter customers.

“Good old customer service. A rarity these days”

In contrast, ALA Insurance provides a full salary to their customer support team based at a UK-registered office. We prioritise our customer calls because we understand that users find it invaluable. You’ll always be able to speak to a friendly and knowledgeable customer service advisor: some of our valued employees have decades of experience in the insurance industry.

Our customer-centric approach means we never hard sell. It helps that we really believe in the value ALA offers. At ALA, we’re pretty flexible, with policies to suit a variety of budgets and requirements. However, our advisors are the first to admit when ALA products aren’t the right fit for you.

We have a 4.9 star rating on Trustpilot with over 17,000 five-star reviews. Competitive pricing and market-leading customer support ensure every customer is fully satisfied with our service. Our approach is evidence that customer service doesn’t need to sacrifice affordability. A competitive price is no excuse for a poor customer experience.

Read all our customer reviews

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