23rd Jun 2021

Brokering better loyalty: Why are almost half of consumers disloyal to their insurance providers?


Customer retention has long been challenging for insurers. The industry has faced criticism for some time, due to loyal customers being quoted higher renewal prices than new customers, resulting in many turning to alternate providers once their policies expire.

In tandem with the Financial Conduct Authority (FCA) publishing its new rules on insurance pricing practices, to ensure loyal customers don’t end up paying more following years of complaints, we have released a report which explores the key factors impacting consumer loyalty across the UK’s insurance sector.

To form the report, we surveyed more than 2,000 consumers. We look at their perception of loyalty today, what sways their purchasing decisions, what they’re looking for in an insurance provider and most importantly, what are the key factors that will ensure they stay put with their existing insurer long-term.

The state of the market currently

The data revealed 44% of consumers admit they’re not loyal to their home, car or life/health insurance providers, and fewer than one in 10 feel like they’re a valued customer. Furthermore, one in five research respondents confirmed they’re not offered better deals if they stick with their provider for multiple years and only 14% feel it pays to be loyal to their insurer, echoing the need for a policy shake up.

Consumers are becoming increasingly selective. They know what they want, when they want it and the resources available to help them get exactly what they’re looking for in a provider, which was further solidified by our research.

The cost of lacking consumer loyalty

When it comes to ranking customer loyalty across various sectors, the data confirmed consumers are least loyal to their insurance provider, when compared to how loyal they are to their telecoms, finance/banking, retail and utilities providers, with supermarkets coming out on top.

Our research really solidified the struggles insurers are facing when it comes to customer retention, with just one in ten confessing they have been a customer with their current provider for more than five years. The data also confirmed consumers are typically loyal to their insurance provider for an average of just 3.3 years, spending around £417 per year.

We know that consumers are becoming increasingly choosy when it comes to who they purchase from, with various factors impacting their decision to stick with a brand long-term. It’s a fact that retaining existing customers is more cost-effective than acquiring new ones, but each and every consumer has different requirements. And when we know that customers don’t feel it pays to be loyal, particularly to
insurers, achieving loyalty across the board isn’t easy. It’s no longer a one size fits all situation and there are various factors insurers should be prioritising when developing their customer retention strategy.

Loyalty across the generations

When it comes to looking for better deals on their insurance policies, older consumers are more likely to explore their options than younger – with good customer service, reliability and quality of product/service, along with price, proving to have the biggest impact on their decision to stay with a
provider. For younger consumers, reliability, customer service and perks are important too. With individual customer value over five years surpassing £2,000, our research confirmed these factors should be prioritised by insurance providers.

What insurers can do to turn the tide on low brand loyalty

Our research uncovered three in five consumers admit bad interactions impact their loyalty to a brand and often result in them cutting ties. While more than one-fifth say they would leave a brand if they engaged in unethical practices and a quarter would leave if they found out they mistreated employees (such as not paying them fairly or forcing them to work long hours).

Many consumers admit they don’t believe it pays to be loyal to their existing insurance provider, but it’s time to change this perception. There are various factors influencing brand loyalty but, above all, ensuring a customer-centric approach is essential for increasing rates of retention.

There are a number of reasons a customer would seek out a new provider, including poor customer service, unethical practices, a lack of trust, not offering perks or a single bad interaction. So, it’s crucial to bear all of these in mind and ensure each is prioritised to instil loyalty.

Find out more and download our full insurance-sector consumer loyalty report below.

Download our report today

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