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Insurers most mistrusted in financial services

Insurers most mistrusted in financial services

Only one in four consumers say they trust insurers, making them the least trusted organisations across the financial services sector, new research has revealed.

The report comes from The Syndicate, the research arm of Protection Review, a review of the UK's health and protection insurance industry. It surveyed more than 2,000 holders and non-holders of protection insurance.

It found trust is the major barrier to purchasing insurance for many people, because they are unsure about insurers’ motives.

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Just over half expressed a preference for savings over protection, saying they didn’t like paying into a product that might not be needed in future, while price was a key objection, with 61 per cent suggesting products were too expensive.

The research found the general public has low expectations that insurers will pay out on claims, but strongly believes they should, even if claimants have not disclosed information such as health conditions.

For example, 80 per cent of respondents felt accidental life insurance claims should still be paid in full even when someone who claimed to be a non-smoker was subsequently found to be a lifelong smoker.

The proportion expecting the claim to be paid fell to 58 per cent if the death was caused by a heart attack but even when the death was attributable to lung cancer, there was still an expectation among 40 per cent of respondents that claims should be settled.

Jo Miller of The Syndicate said: "This is the first time we have asked consumers directly for their views on whether claims should be paid in different situations and although the results will be interesting for insurers, they offer us a valuable insight in the way people regard their policy as a contract.

"For many respondents, the very fact that premiums had been paid meant that there was an entitlement for a claim to be settled, even if based on non-disclosure at the application stage.

"These findings offer valuable insights into consumer perceptions of insurers and paying claims and suggest how many people overlook the potential for a claim to be assessed once a policy is purchased and therefore regard terms and conditions as a reason to mistrust insurers."

Elsewhere, the survey found money and health issues were people’s main concerns for the future, but that not many people have a solid plan B in case they hit financial trouble.

The most likely coping mechanism was to ask a partner or family for support, but 64% of people admitted they would be uncomfortable asking for financial help, and 54 per cent said they would explore other avenues first.

When asked how confident they were that their savings would support them for longer than six months in the event of a loss of income due to illness or accident, 68 per cent of the sample were confident in their savings, compared to 88 per cent believing that insurance would offer support if needed. Insurance was the highest scoring support mechanism, with the state scoring 79 per cent.