Customers 'stick with same insurer'

Around 56% of drivers have not switched insurance provider during the past year

Just over half of consumers have used the same motor insurer for the past year, but some companies are only managing to retain a third of their customers, research indicates.

Around 56% of drivers have not switched insurance provider during the past year but policyholder retention rates range from 80% for some firms to just 35% for others, according to market research group JD Power and Associates.

The research, which was based on interviews with 5,000 policyholders, found that insurers Zurich/Zurich Connect, Liverpool Victoria and RSA had the highest customer retention rates.

Jeremy Bowler, senior director of insurance practice at JD Power and Associates, said: "While some of the highest-performing car insurance companies in the UK market successfully renew more than eight in 10 policyholders, others manage to retain barely one-third of theirs, which means they have to invest in advertising and lead commissions to replace two-thirds of their customers annually.

"Furthermore, 44% of customers overall switched insurers during the past 12 months, which represents nearly £3.5 billion in premiums that were up for bid.

"It's clear that focusing on customer retention can bring insurers substantial benefit in reducing costs and boosting profitability."

The group, which measured customers' overall satisfaction with their motor insurer, found that RSA is most likely to have happy customers, achieving an average score of 762 out of 1,000, followed by Liverpool Victoria. Sheilas' Wheels, Diamond and Swiftcover made up the rest of the top five.

The study also found that insurers are beginning to offer significant discounts to people who take out car insurance alongside other policies, and this is likely to continue.

The AA recently said the average cost of comprehensive motor insurance had soared by 40% during the past year on the back of high fraud losses and increased personal injury claims.

The cost of cover is expected to continue rising for the foreseeable future as the industry struggles to become profitable again.