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

Year in, year out, customer retention has long been a challenge for insurers. The industry has faced criticism for some time due to loyal customers being quoted higher renewal prices than new customers – an issue that's caused many people to opt for alternate providers once their policies expire.

We're sure this will be music to the ears of many: after years of complaints, in 2021, the Financial Conduct Authority (FCA) finally published new rules on insurance pricing practices that ensure loyal customers don't end up paying more than new customers. For a deeper dive into other consumer bugbears, we researched the key factors impacting consumer loyalty across the UK's insurance sector.

We surveyed more than 2,000 consumers, looking at their perception of loyalty today, what sways their purchasing decisions, what they look for in an insurance provider, and most importantly, what are the key factors that guarantee that they'll stick with their existing insurer for the long run.

The state of the market currently.

We found that 44% of consumers admit they're not loyal to their home, car, life, or health insurance providers, and fewer than one in 10 feel like they're valued. 

Also, one in five confirmed that 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 – if this doesn't echo the need for a policy shake-up, then what does?

The consumer of today is 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 – all of which our research further shines a light on.

The cost of lacking consumer loyalty.

When we asked people to rank customer loyalty across various sectors, we found that consumers are least loyal to their insurance provider, when compared to how loyal they are to their telecoms, finance, banking, retail, and utility providers, with supermarkets coming out on top.

Our research really hammers home the struggles insurers face when it comes to customer retention, with just one in ten confessing they've been a customer with their current provider for more than five years. The data also shows that consumers are typically loyal to their insurance provider for just 3.3 years on average, spending around £417 per year.

We know that consumers are becoming very picky when it comes to who they purchase from, with lots of things 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 wants and needs. And when we know that customers don't feel it pays to be loyal, especially to insurers, earning loyalty across the board isn't easy. It's no longer a one size fits all situation. Insurers have got to juggle various elements when developing their customer retention techniques.

Loyalty across the generations.

There seems to be a split between what each generation wants when it comes to loyalty. 

Older consumers are more likely to explore their options than younger when looking for better deals on their insurance policies. And it's good customer service, reliability, quality of product/service, and price that sway their decision to stay with a provider. 

Whereas for younger consumers, reliability, good customer service, and perks are important too. And with individual customer value over five years passing £2,000, our research confirms that insurance providers need to prioritise these needs. 

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

Shockingly, three in five consumers we reached out to admit that bad interactions impact their loyalty to a brand and often pushing them to cut ties. While more than one-fifth 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. Several things influence brand loyalty. But above all, ensuring the customer is always at the centre of everything is essential for increasing retention rates.

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

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