New research from NTT DATA UK&I has unveiled that 82% of UK consumers have not noticed a change in their interactions with insurance providers since the Consumer Duty Act was implemented in July 2023.
This revelation comes just ahead of the first annual board reporting deadline on 31st July 2024, when insurers will need to demonstrate their compliance with the new regulation.
The findings suggest that the insurance industry has considerable room for improvement in adapting to the new regulatory framework.
Despite the Consumer Duty Act’s objective to enhance customer care, NTT DATA UK&I’s research shows that while 99% of consumers feel their insurance needs are being addressed to some extent, 46% remain either neutral or dissatisfied with their policies.
Additionally, a significant 47% of insurers only make contact with their customers on an annual basis, which could be contributing to widespread dissatisfaction.
Trust in insurers is notably low, with 48% of consumers questioning whether their insurer genuinely has their best interests in mind.
The study highlights several key areas of concern. Only 45% of consumers felt that the communications they received from their insurance providers were somewhat tailored to their needs, while 40% found these communications to be generic.
This indicates a substantial gap in personalised customer service. Moreover, only 28% of consumers have acquired new policies in the last six months, suggesting potential barriers to product uptake or a lack of appealing offerings.
There are also notable concerns regarding the use of artificial intelligence (AI) in the insurance sector. Some 17% of consumers worry about losing personal interaction, and 18% question AI’s ability to handle complex claims effectively.
On a positive note, 42% of consumers are open to sharing more data for improved experiences, though 34% remain hesitant about data sharing.
Additionally, 29% of neurodivergent individuals report difficulty in accessing necessary policy information compared to 18% of non-neurodivergent individuals.
The Consumer Duty Act is designed to transform customer care within financial services by mandating firms to ensure positive outcomes for customers, provide products and services that meet their needs, and deliver benefits through transparent and supportive practices.
However, NTT DATA UK&I’s survey of 2,000 UK consumers reveals a disconnect between the regulatory intent and the actual experiences of customers.
Deborah Bale, Head of General Insurance & Broking at NTT DATA UK&I commented, “Our latest research paints a stark picture of an industry at a crossroads. The requirements outlined in the Consumer Duty Act require a conscious commitment, but they also offer an unprecedented opportunity to redefine what insurance means to consumers. The insurers who will lead the industry into its next chapter are those who can balance innovation with customer understanding. We’re looking at a future where data-driven personalisation and AI aren’t just buzzwords, but the bedrock of rebuilding consumer trust.”
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