Life insurance providers are under pressure to improve customer engagement and rebuild trust, following new analysis from Broadstone based on the Financial Conduct Authority’s latest Financial Lives Survey.
The survey shows life insurance customers report the lowest satisfaction levels across all general insurance products, with just 53% expressing satisfaction—compared to 73% for contents insurance. Engagement is also low, with over a quarter (26%) of policyholders admitting they do not understand their life insurance, and only 25% having read their policy documentation in detail.
Despite these issues, loyalty in the life insurance market remains strong. Almost 4 in 10 customers (38%) have stayed with the same provider for over 10 years, and 24% for between 5 and 10 years—significantly higher than for other forms of insurance. However, 22% of customers said they have low trust in their provider, and a further 20% said they did not know—both the highest proportions for any insurance product.
Ewen Tweedie, actuarial director in Broadstone’s Insurance, Regulatory and Risk Advisory division, said: “The findings from the FCA reveal an opportunity to increase transparency, communication and consumer engagement. It finds many customers are unclear on the purpose or value of their life protection insurance leading to inertia, low levels of trust and satisfaction, and the potential to lead to poorer outcomes further down the line.
“Life insurance is a vital product that provides future financial security for families and loved ones if the policyholder becomes ill or dies, helping to cover living costs, debts or other expenses such as funeral costs. For consumers that understand the role of life insurance in long-term financial planning, it should offer peace of mind but this latest FCA data implies a market that is not functioning as well as it could be.
“For life insurers, there is a clear opportunity to gain brand trust and a competitive advantage if they are able to help customers understand the purpose of their policy and its benefits to them.”
