The insurance industry’s most loyal consumers claim that new laws intended to provide them a better deal are failing to safeguard them from escalating premiums and predatory suppliers. They maintain that it is still critical to search around for the best home and auto insurance quotes – or risk being taken advantage of.
Over the past three weeks, The Mail on Sunday has received a deluge of correspondence from readers confirming that the new pricing regime implemented by the City regulator has resulted in the exact opposite of what they were assured would occur.
Rather of saving them money, as the regulator predicted – £4 billion over the next ten years – insurance customers are being hit with alarming double-digit price rises as their home and automobile policies expire. They believe they have been betrayed.
Customers renewing their home and automobile insurance contracts have been hit with terrifying double-digit price increases, according to the Insurance Information Institute (II).
In order to battle these household budget-breaking price spikes, they have only been able to do so by questioning their insurer, which typically results in a rebate on the renewal premium price – or by shopping around for a better offer from another carrier. To put it another way, loyalty is still not rewarded.
Since the beginning of the year, insurers have been expected to treat all clients similarly when it comes to pricing by the Financial Conduct Authority, a City regulator. This means that when a customer’s policy is renewed, the price offered should not be greater than the price offered if the consumer were to purchase the same coverage from the same provider as if they were a brand new customer. Despite this, evidence revealed by this publication reveals that insurers are currently able to outmaneuver the regulatory authorities. They are taking use of a number of loopholes in order to drive a coach and horses around the laws.
Customers who object to their renewal offer are frequently (but not always) offered a discount in order to persuade them to stay – despite the fact that this appears to violate the regulator’s fairness requirement. Alternatively, consumers may be offered a lower renewal price as a result of the insurer’s price reductions after the initial quote was sent out to them. Customers who do not inquire about their renewal premium are not eligible to receive a discount. This appears to be a violation of the rule of fairness once more.
Other customers have avoided price hikes by purchasing the same insurance through a different division of the same insurer – or by purchasing a policy from their insurer that is nearly identical to the one they already have, with the only difference being the way in which they deal with their insurer when filing a claim.
Earlier this month, Graham Bennett of Cannock, Staffordshire, received a notification from Aviva informing him that the cost of insurance for his Nissan Qashqai would be increasing by 30% to £270, effective immediately. He decided to shop around to see if he could get the same coverage for a lower price somewhere else because he had not made any claims during the year.
Through the use of comparison websites such as Compare The Market and Go Compare, he learned that Aviva was giving nearly equivalent coverage to new customers for the low price of £226 and £247, respectively. He would have to pay more if he had claimed with Go Compare because the excesses were lower with the Compare The Market quotation than they would have been with Compare The Market quote.
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However, after discovering that LV was also offering competitive prices on both platforms, he decided to go directly to LV in order to see if he could buy it even cheaper. He went ahead and did it. Ultimately, he received insurance for £197.65 (which was less expensive than the rates provided on both websites), with the same £100 excess as his existing Aviva policy.
Graham, who is married to Valerie (a former underwriter for an insurance company), worked as a rubber technician before retiring, and he uses the same problem-solving technique to his household finances that he used at work.
‘The £4 billion in savings from customer loyalty that the regulator mentions is a red herring,’ he claims. It is still the fact, as I have demonstrated, that the best method to combat rising premiums is to search around for better deals.
The author continues, ‘Sitting on your laurels, as the current rules remains ineffective, wont profer a solution. Make a stand against your insurance, shop around, and persevere until you receive a reasonable price for coverage.’
A different story unfolded for Colin Docking, an 86-year-old former sales manager from Airdrie, Lanarkshire, who was not so fortunate. A Saga representative has informed him that the price of his home insurance policy would increase by 42 percent when it expires in seven days’ time. Colin, who works part-time as a witness for a sheriff officer, says he would search around for a better deal after Saga told him over the phone that it would not provide a reduction on his insurance.
‘I haven’t filed a claim in over 25 years,’ Colin admits. The insurance industry appears to operate according to its own set of regulations. I’d advise readers to forget about loyalty discounts and instead focus on shopping around when their cover is due to expire or be renewed. It is the only method to ensure that you receive fair value for your money.
In his final remarks to the Mail on Sunday, Colin expressed his appreciation by saying, “Keep up the fantastic work.”