More than half of people who complained to an insurance firm in the past year said their worries were handled poorly, according to new research.

Some 57% of clients who lodged a complaint during 2007/2008 were unhappy with the way it was dealt with, up from 50% during the previous 12 months, figures from the Association of British Insurers showed.

The number of clients who thought their complaints had been handled very good or excellent also fell from 14% to 10% during the previous 12 months.

Problems with an insurance product remained the most common reason for complaints, cited by 45%, followed by general errors at 39%. Clients also complained about poor communication and service.

The ABI is currently working with insurers to improve the way they handle complaints.

The group is also developing a complaint management toolkit on its website, available from the middle of this year, and is also encouraging companies to obtain and learn from customer feedback once a complaint has been settled.

However, other aspects of the survey, based on the responses of nearly 20,000 customers of 32 insurance firms, were more positive with 85% of consumers saying their provider treated them fairly.

Some 86% thought their insurance company was easy to do business with, while 53% thought the insurance industry had an excellent reputation, up from 48% last year.

But there was a 2% drop in the number of people who would recommend their insurer to a friend and the number of consumers who rated the claims and payments process highly fell 3% to 50%.

Maggie Craig, the ABI's director of life and savings, said: "Despite the fact that this year's Customer Impact Survey was carried out at a time of economic uncertainty, when consumer confidence overall had dipped, the results show that the insurance industry is making some progress in improving customer experiences.

"The industry recognises that Customer Impact Scheme is a long-term undertaking and that it will take time for the full effect of the industry's work to be seen."

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