The 2024 European Insurance Customer Survey: Key Statistics

The UK insurance sector faced several hurdles over the past year, highlighted by a rise in claims related to climate change events, a hardening reinsurance market, and increased losses in motor insurance. These challenges, compounded by new regulatory measures such as the Financial Conduct Authority’s Consumer Duty rules, have put additional pressure on insurers' profitability and operational strategies.

Amid these challenges, insurers are also grappling with how to enhance their reputation among UK customers, particularly those who have not filed any claims in the previous twelve months. According to a recent survey, customers who have made claims generally report positive impacts on their perception of the industry and their trust in their insurers. This is contrasted sharply with those who have not interacted with their insurers, who tend to hold negative views about the industry.

The survey underlines a persistent engagement gap that, while not new, remains a critical issue for insurers. Closing this gap is becoming increasingly important, and insurers are looking to technology, particularly advances in Generative AI, to improve customer service and engagement. However, the effectiveness of these technologies depends significantly on the pre-existing opinions customers hold about the industry.

On a positive note, the insurance industry is seen as an attractive employment sector, especially among younger demographics, suggesting a dynamic and inclusive environment. This perception could be pivotal as the industry competes with other sectors for talent, particularly in areas that involve innovative technology solutions.

Will McAllister, SVP and Managing Director, EMEA, at Guidewire, says, “Even though 2024 was a challenging year for customers and the insurance industry alike, our findings showcase just how essential personalised customer and insurer interactions are. Insurers have a key role in their customers’ lives, but at the moment this truth is only made clear to policyholders at the point at which they make a claim. This cannot remain the case. If insurers want to create more customer loyalty, and thus improve their expense ratio, they need to find ways to add value to their customers’ lives so that the claims and renewal processes are not the only meaningful engagements a customer has with their insurer.”

“It is also interesting that in an age where consumers freely share data with many other vendors and service providers, they still appear to be averse to sharing their data with insurers. The responses suggest that insurers still have a way to go in communicating and demonstrating the value the industry can deliver to improved pricing, better claims handling, and even loss prevention through enhanced use of data and technology,” continues McAllister.

“Given the potential for data and technology to transform how insurance is purchased and provided in the years ahead, this feels like a key area where the industry should focus its attention.” 

Challenges and Emerging Trends in the UK Insurance Industry

Public Attitudes Toward AI in Insurance

The deployment of Artificial Intelligence (AI) in insurance has met with mixed reactions. While there is some degree of acceptance for AI assisting in supportive roles—such as filling out forms or supporting call handlers—its use in autonomous decision-making processes is viewed with considerable skepticism. According to the survey:

• AI Tool Usage: 55% of UK respondents have never used an AI tool like OpenAI's ChatGPT or Google Bard. Only a small fraction use AI tools daily (5%) or weekly (7%).
• Comfort with AI Decision-Making:
  • 49% of respondents are uncomfortable with AI determining insurance prices without human oversight.
  • 53% are uneasy about AI processing claims and deciding their value autonomously.
• Acceptance in Supportive Capacities:
  • 41% are uncomfortable with AI assisting in document preparation, whereas 32% are comfortable.
  • 30% would be comfortable with AI aiding human call handlers, but 42% would feel uncomfortable.

Interestingly, those who have made claims in the past year are more open to using AI, with 41% comfortable with AI making pricing decisions and 62% okay with AI assistance in filling out forms.

AI Integration in the UK Insurance Sector: User Adoption and Preferences

Recent data reveals a significant trend in the UK insurance industry regarding the adoption and perception of Artificial Intelligence (AI) among insurance customers. The industry, while cautiously integrating AI into its operations, has observed that early adopters of AI technology are more likely to support further AI implementation in insurance processes.

AI Adoption and Comfort Levels

According to a survey, users who frequently engage with AI tools exhibit a higher comfort level with AI making autonomous decisions in insurance applications:

• Daily AI users: 64% are comfortable with AI determining insurance pricing without human oversight, and 68% approve of AI autonomously processing claims.
• Weekly AI users: 55% accept AI in pricing decisions, and 58% are okay with AI handling claim processing.
• Monthly AI users: 38% are comfortable with AI making pricing decisions, and 32% support AI in claim processing.
• Biannual AI users: 34% show comfort with AI in pricing decisions.

AI in Supportive Roles

The acceptance of AI extends to supportive roles, enhancing customer service efficiency:

• Daily AI users: 79% appreciate AI assistance in filling out insurance documents, and 64% are comfortable with AI-supporting human call handlers.
• Weekly AI users: 65% and 58%, respectively, endorse these AI applications.
• Monthly AI users: 58% and 52% respectively, support these uses.

Communication Channels and AI Acceptance

Preferences for communication channels also influence customer comfort with AI:

• Website chatbot users: 36% support AI in policy pricing decisions.
• Social media platform users: 45% are comfortable with AI processing claims.

Trust and Confidence in AI

Building trust in AI is crucial for broader acceptance:

• Overall confidence: Only 6% of respondents have full confidence in AI in the insurance industry, which rises to 45% among daily AI users.
• Greater confidence factors: 34% would be reassured by the option to refer AI decisions to a human, and 22% seek explanations for AI decisions.

Embedded Insurance and Preventative Services

The survey also touched on embedded insurance and proactive services:

• Embedded Insurance: 40% of respondents are comfortable with purchasing insurance from companies like IKEA, Amazon, or Tesla during other transactions, with higher comfort among those more digitally inclined (66% for social media users, 53% for chatbot users).
• Proactive Services: Interest remains high with 68% of respondents favoring preventative services from insurers in 2024, up slightly from 66% in 2023. This interest is significantly higher among those who have made a claim (85%) and those concerned about the cost of living.

Evolving Trends in Usage-Based Insurance (UBI) and Policyholder Preferences

In recent findings from the UK insurance sector, there's been a notable shift in attitudes towards Usage-Based Insurance (UBI). While interest in UBI seems to be growing, actual adoption rates have not kept pace, indicating a complex dynamic within consumer behaviour and expectations.

Trends in UBI Adoption and Perceptions

• Adoption Rates: The adoption of UBI has decreased from 14% in 2023 to 10% in 2024. Despite this decline, there has been a 5% increase in the number of people who recognize the value of UBI, rising to 57%.
• Motivations for UBI: The primary motivation for choosing UBI has shifted from cost savings to lifestyle alignment. In 2024, 47% of UBI policyholders cited greater flexibility as the top reason, marking a significant increase of 17% from the previous year. Additionally, 36% stated that UBI fits better with their lifestyle, up by 6% from 2023.

Customer Attitudes Towards Data Collection

• Data Collection Skepticism: Skepticism towards data collection by insurers has increased, with 24% of respondents unable to understand the need for such data, up from 18% in 2023.
• Positive Views on Data Collection: However, 28% view data collection positively, believing it improves services and reduces prices for low-risk behaviors. This figure has remained stable compared to the previous year.

Demographic Insights

• Younger Generations’ Views: Younger demographics (aged 18-24) are more favourable towards data collection, with 42% supporting it as beneficial.
• UBI Policyholders’ Views: Those with a UBI policy are more likely to support data collection (54%), reflecting a correlation between personal experience with UBI and openness to data-driven services.

Implications for Insurers

The data suggests that insurers need to refine their marketing strategies for UBI. Rather than focusing solely on cost savings, marketing should highlight the flexibility and lifestyle compatibility of UBI, especially targeting demographics that show higher levels of interest but lower adoption rates, such as the 45-54 and 55+ age groups.

Climate Change and Insurance: Perceptions and Responsibilities in the UK

The latest survey on UK policyholders reveals mixed sentiments regarding the role of insurers in combating climate change. A significant portion of the respondents (35%) believes that insurers should not play a role in addressing climate change, viewing it as outside the scope of their responsibilities. However, there are notable variations in opinions among those who do see a role for insurers in environmental activism.

Public Expectations of Insurers on Environmental Issues

• Environmental Investments: 27% of respondents believe insurers should invest more profits into environmental projects, a slight decrease from 29% in 2023.
• Sustainable Practices: 26% suggest that insurers focus on repairing rather than replacing damaged goods, down from 28% last year.
• Global Influence: Another 27% think insurers should leverage their global market positions to influence the actions of polluting companies, up from 25% in 2023.
• Younger Generation’s Perspective: Notably, 40% of respondents aged 18 to 24 support insurers using their influence against polluters, indicating a strong environmental consciousness in younger demographics.
• Fossil Fuels: About 17% advocate for insurers to cease insuring fossil fuel projects and divest from such holdings.
• Policy Design: 23% of those surveyed think insurers should create policies that encourage sustainable behavior among customers.

Comparison with European Sentiments

The survey highlights a stark contrast between the UK and other European countries regarding the perceived role of insurers in tackling climate change:

• Spain: Only 14% believe insurers have no role in addressing climate issues.
• France: 19% share this view.
• Germany: 20% agree, indicating that more mainland Europeans see a role for insurers in combating climate change compared to their UK counterparts.

Context of International Losses

The increased awareness and concern in mainland Europe might be influenced by higher financial losses due to climate events compared to the UK. For example:

• France: Experienced a significant $2.1 billion loss from Storm Ciarán.
• Germany: Reported €4.9 billion in damages due to extreme weather events.

Insurance Purchase Decisions in the UK

The survey also sheds light on how UK consumers choose their insurance providers:

• Decision Making: 49% of UK respondents make their insurance decisions independently, with men slightly more likely (54%) to do so than women (46%).
• Influence of Brokers: Only 5% rely on insurance brokers for advice, though this figure rises to 13% among those who have made a claim.
• Social Media Influence: Those willing to use social media platforms for insurance claims are more likely to listen to their social media community (25%) and broker advice (16%).
• Brand Recognition: The most significant factor in choosing insurers remains brand recognition, especially among younger individuals (43% of 18 to 24-year-olds and 41% of 25 to 34-year-olds).
• Family and Friends: Recommendations from family and friends also play a critical role, particularly for younger demographics.
• Cost and Coverage: For older age groups, cost and coverage are pivotal, becoming the dominant factor for those aged 55 and over (46%).

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