More than one in three complaints made to the Financial Ombudsman Service in the first three months of the year against insurance companies were upheld in favour of the customer.
Insurance DataLab found that the worst performer was special event insurance, with 57 per cent of complaints being upheld by the Fos in Q1 2023.
This means that the ombudsman found insurers made the wrong decision in more than half of all cases closed over that period, and it represents an increase of 18 percentage points on the same period in 2022.
Building warranties had the second highest upheld rate, with the Fos finding in favour of the customer in 44 per cent of complaints - an increase of 17 percentage points on Q1 2022.
However, the research added that both special event insurance and building warranties had low levels of complaints, with the Fos receiving 35 and 78 complaints about these respective product lines in Q1 2023.
Car and motorcycle had the most complaints of any product with 4,221, ahead of buildings insurance, which received 1,805 complaints and travel insurance, which received 1,426.
Of all the general insurance products covered by the analysis, only gadget insurance reported an improved upheld rate over the first quarter of 2023, with the Fos finding in favour of the customer in 34 per cent of cases, compared to 31 per cent for Q1 2022.
Insurance DataLab co-founder, Dan King, said: “This should make for worrying reading for insurers, especially with the consumer duty implementation deadline looming large on the horizon.
“More than one in three complaints being upheld in favour of the customer and a significant increase in the number of complaints being referred to the Fos does not exactly scream fair value.”
King added that, with the FCA stating that it will be looking for outliers in such data when it comes to monitoring performance post-implementation, those firms with particularly high upheld rates could well find themselves under scrutiny.
tom.dunstan@ft.com
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