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Rising costs stir discontent amongst UK insurance customers

Insights from the UK Insurance Sentiment Index, by Megan Witthuhn, Head of Analytics

The global economic downturn has led to rising costs for necessities such as groceries, fuel, mortgages, and utilities, signalling a broader cost of living crisis. In the UK, this has extended to the insurance sector, where short-term policies in particular have undergone major price hikes. During these trying times, effective communication is crucial; however, many insurers have struggled to provide this, resulting in a growing disconnect with their customers.

This is according to the latest UK Insurance Sentiment Index, conducted by PwC UK in collaboration with DataEQ, which found that 85% of consumers’ price-related insurance conversations on social media focus on affordability issues. This discourse highlights how premium hikes disproportionately impact the average consumer, with the most vulnerable and elderly populations — those who often need insurance the most — feeling particularly neglected.

Other customers that stood out as being particularly disgruntled were those with a long history with the insurer. These long-term customers reported feeling penalised at renewal times, believing their loyalty was being undervalued. This sentiment breeds distrust, as many expressed suspicions that new customers might receive better rates for the same coverage, prompting a decline in brand loyalty as consumers begin shopping around for the best prices and policies.

The situation is further complicated by non-transparent cancellation fees and the practice of automatic (“auto”) policy renewals. Many customers expressed frustration over these issues, feeling trapped and ill-informed about their options to renew or cancel without penalty.

Could UK insurers learn a thing or two from the South African playbook?

Whilst price hikes are inevitable in current times, the manner in which they are communicated, and the lack of proactive customer support can significantly temper customer dissatisfaction. In times of uncertainty, communication and transparency are key.

Unlike UK insurers, South African insurance companies have successfully implemented advanced notice communication and the results have been exemplary. To ensure their communication efforts are effective, South African insurers reach out via email, SMS and calls, as well as giving the customer options of alternative plans and offerings to cushion the impact of rising premiums.

This meant that, despite annual increases occurring in both regions, Net Sentiment was positive for pricing and fees conversation in South Africa, while the UK had an exceptionally low score as shown in the chart below.

What improvements do UK customers need from their insurers?

The perceptions and feelings of insurance customers during this period of rising premiums indicate significant gaps in communication. Insurers must therefore strive to communicate changes to policies or premiums with utmost clarity and transparency. To do this, there is a critical need for robust support staff, alternative policy options, and considerations for vulnerable customers. Recognising and appreciating loyal customers can also go a long way in making them feel valued and respected. Satisfied customers are more likely to praise quality insurers and stay committed to their policies.

 As the insurance sector navigates through the economic challenges, the path forward involves more than just adjusting pricing structures; it requires a holistic approach to customer engagement and retention strategies that prioritise clear communication, transparency, and genuine recognition of customer loyalty.

Access the full UK Insurance Sentiment Index here.