By Daniel Hunter

Despite the reputational damage suffered by the banks since the financial crisis, insurance companies are less trustworthy, according to latest EY Global Consumer Insurance Survey.

The survey found that British customers are less trusting of their insurance companies than anywhere else in Europe. And the UK's trust levels are more than 50% below the global average.

Graham Handy, Global Customer Insurance Leader at EY, said: “At a time of great upheaval across the entire UK insurance industry, with the motor market reporting unprofitability, the home insurance market not far behind and dramatic changes to pensions, this news could not come at a worse time.

“The shift to accessing pension funds via cash machines and debit cards, just as you would a current account, means that the banking industry is well placed to weigh in. And, given the higher levels of trust placed on banks, we could easily see market share slip away from insurers if action isn't taken.”

Over a quarter (26%) of UK customers surveyed claimed that they were likely to switch insurance provider in the next 12 months. Cost is undeniably the main reason behind this, with policy benefits and coverage at a distant second and reputation and benefits barely making an impact.

The UK insurance consumer is also far more driven by price than many of its international counterparts - 83% of those likely to switch stated cost as the primary reason. This is much higher than the global average (67%) and other comparable markets such as the US (64%), France (60%) or Germany (72%).

“In a price-driven market, it is very hard to differentiate service offerings, but insurers need to find the touch points which are important to customers in order to move away from bargain basement prices being the sole driver for customer decisions," Mr Handy added.

Communication between customers and their insurer in the UK is very low, with just 30% of people claiming to have had an interaction with their insurance company in the last 18 months. This places the UK in last position across Europe, the Middle East and Africa in terms of customer communication, and compares with a far higher global average of 56% of customers having interacted with their insurer over the last 18 months.

UK customers actually want to receive more communication from their insurer; not just general information or policy updates, but also promotions. Over half (54%) of customers are never contacted about promotions, and 23% would like to receive them annually.

Mr Handy explained: “It is clear that in the UK the current level of interaction between insurers and their customers lags far behind other markets. Communications are being led by the customer, which is the wrong way round, especially in an environment of rising competition. Customers are asking for information, and insurers should be doing all they can to provide it. Also, by sharing information and promoting their services, they could gain competitive advantage in a very price-driven market.”

The majority of UK insurance customers still prefer to manage their policy enquiries via the telephone, but more than 30% claimed to be open to using emerging channels, including webchats and smartphone apps. In addition, 17% of customers would like to trade physical mail and phone contact for email, demonstrating a shift towards digital interaction.

Mr Handy said: “It’s clear that insurers have yet to get ‘direct-to-consumer’ right. Even where there is a broker or an agent managing the relationship, it doesn’t mean the customer is getting the information they want. The way consumers want to be communicated with is changing - they want more frequent, meaningful and personalized messages, and are willing to embrace new ways of receiving it - and the insurance provider ought to ensure they are delivering this. With the rise of digital, it is increasingly easy, and the race is now on to see who can do it most effectively, and the fastest.”