People are switching providers for their car insurance more than any other type of insurance

More people looking to switch providers for their car insurance than any other type of insurance

– 87% of those looking to switch car insurer cited saving money as their biggest reason for doing so
– Customer satisfaction for car insurance has decreased by a fifth year-on-year 
– It comes as average car insurance costs hit record highs according to new data from the ABI 

With car insurance premiums increasing far above the rate of inflation, 37%1 of UK drivers are looking to switch their provider in the next 12 months. This is a larger proportion than any other type of insurance, according to research commissioned for financial services review site, Smart Money People, and conducted by Consumer Intelligence.      

The data is taken from the Insurance Uptake Score, a new bi-annual report of consumer predictions about whether they will continue with, purchase, increase, reduce, or cancel their cover of ten types of annual insurance products most commonly purchased.

After car insurance, home insurance has the highest number of policyholders looking to switch provider (27%).

Saving money the driving factor for switching 

An overwhelming 87% of motorists planning to switch are doing so to find a cheaper policy. 

The Association of British Insurers (ABI) recently revealed that in Q3 of 2023, the average premium paid for private comprehensive motor insurance was £561- up 29% on Q3 2022 and is at its highest since it started collecting this data in 2012.

According to Smart Money People’s research, other reasons for switching include changing the level of coverage (8%), a change in circumstances (10%), and having had a bad experience with their current provider (3%). 

Smart Money People CEO, Jacqueline Dewey, said: “Providers are dealing with a perfect storm of cost hikes that are higher than inflation, from energy-related expenses, to replacement parts becoming dearer, and second hand car costs also rising, and as a result, drivers are feeling the pinch. 

“Since the FCA introduced practices to tackle the issue of insurers increasing prices for loyal customers without a change in their risk profile, firms can’t increase prices for renewal customers without also increasing the prices they offer new customers. As a result, overall prices are higher. 

“With the average comprehensive car insurance policy now exceeding £500, it’s natural drivers are looking for ways to lower their premiums, especially given the rising cost of living. However, it’s really important people are careful not to cut corners that leave them out of pocket should they need to claim.” 

Most common policy changes 

Of the one in ten (11%) car insurance customers who stated they would likely change their coverage in the next 12 months, 7% plan to increase their cover, and 5% intend to reduce their cover.

Of the 7% who intend to increase their cover, 42% predict they’ll increase the limits they’re covered for and 40% say they’ll look to add additional cover/add-ons. The most popular add-ons drivers are looking to take out are protected no claims discount (62%), legal expenses cover (43%) and guaranteed courtesy car / hire (40%).

Over a third (33%) of those planning to increase their cover said it was to cover them for things they might not be able to afford on their own. 

Of the 7% decreasing their cover, 59% predict they’ll remove optional covers or add-ons, whilst 23% plan to decrease the limits they’re covered for. 

Customer satisfaction down 

According to data from Smart Money People, the average customer rating for all car insurance providers has dropped considerably in 2023 compared to previous years. More than 42,000 reviews left over a five year period, and across 105 providers, were analysed.2  

In the past year alone, satisfaction is down 20%. Car insurance providers received an average rating of 4.64 (out of 5) by their customers in 2022 on the Smart Money People site, compared to 3.70 in 2023. It is the only year of the five where the average rating has dipped below 4.  

Unsurprisingly, given the rise in premiums, Smart Money People’s value for money score for car insurers decreased from 4.58 in 2022, to 3.67 in 2023. Customer service scores have fared just as poorly: in 2023 the average score was 3.71 compared to 4.62 in 2022.  

Jacqueline Dewey continued: “This data goes to show that it doesn’t always pay to select a car insurance policy simply based on cost, but is instead important to think about other aspects such as customer service, and how easy it is to make a claim. Always research a new provider and policy carefully before you make any commitments, and read reviews from existing customers first to see if they deliver on their promises, or it could end up costing you more in the long run. 

“Of course, saving money where possible is essential for many, but there are smart ways to do it, from shopping around, to considering a telematics policy, to looking into buying add-ons as separate products which can actually sometimes work out cheaper.

“Sifting through so many policies and providers can be overwhelming, so remember that when it comes to car insurance, as with any type of insurance, you have a 14-day cooling off period where you can receive a full refund if you cancel your policy during this time.”