Loyal insurance customers say new rules designed to give them a fairer deal are failing to protect them – you MUST shop around for new deals
Loyal insurance customers say new rules designed to give them a fairer deal are failing to protect them from rising prices and rapacious providers. They say it is still vital to shop around for the best home and car cover quotes – or you will be ripped off.
Over the past three weeks, The Mail on Sunday has been inundated with correspondence from readers, confirming the new pricing regime introduced by the City regulator has resulted in exactly the opposite to what they were told would happen.
Instead of saving them money as the regulator said its measures would do – £4billion over the next ten years – insurance customers have been met with frightening double-digit price increases as their home and motor policies renew. They feel betrayed.
Protection: Insurance customers have been met with frightening double-digit price increases as their home and motor policies renew
The only way they have been able to combat these household budget-breaking price hikes is through challenging their insurer, often resulting in a discount on the renewal premium price – or by shopping around for a cheaper deal from another provider. In other words, loyalty still does not pay.
Since the start of the year, insurers have been required by City regulator the Financial Conduct Authority to treat all customers equally on price. This means that when a customer’s policy renews, the price offered should be no higher than if they were buying the same cover from the same provider as a new customer. Yet evidence uncovered by this newspaper indicates that insurers are currently running rings around the regulator. They are exploiting a series of loopholes to drive a coach and horses through the rules.
It means customers who query their renewal offer are often (not always) given a discount to encourage them to stay – even though this seems to fail the regulator’s fairness test. Or they are given a cheaper renewal price as a result of the insurer reducing its prices since the initial quote was sent out. Customers who don’t query their renewal premium don’t benefit. Again, this appears to flout the fairness rule.
Other customers have beaten the price hikes by buying the same cover, but through a different division of the same insurer – or by purchasing a near identical policy from their insurer, with the only difference being the way in which they deal with it when making a claim. Graham Bennett, from Cannock in Staffordshire, recently received a renewal notice from Aviva, telling him the cover for his Nissan Qashqai would be increasing by 30 per cent to £270. Having made no claims during the year, he thought he would shop around to see if he could get the same cover cheaper elsewhere.
Using comparison websites Compare The Market and Go Compare, he discovered that Aviva was offering near identical cover to new customers for just £226 and £247. The only differences were in the excesses he would have to pay if he made a claim – lower in the case of the Compare The Market quote, higher with Go Compare.
But having seen that LV was also offering competitive prices on both websites, he thought he would go direct to LV to try to get it even cheaper. He did. The result was cover for £197.65 (cheaper than the quotes given on the two websites) with the same £100 excess as with his existing Aviva policy.
Graham, married to Valerie (a former underwriter for an insurer) was a rubber technician before retiring and he applies the same fault-solving approach he adopted at work to his household finances. ‘This loyalty saving of £4billion that the regulator talks about is a red herring,’ he says. ‘As I have proved, it’s still the case that the only way to fight rising premiums is to shop around for better deals.’
He adds: ‘Sitting on your laurels, as these new rules encourage, simply does not pay. Challenge your insurer, shop around and plug away until you get a fair price for cover.’
Colin Docking, an 86-year-old former sales manager from Airdrie in Lanarkshire, has not been so lucky. He has been told the price of his home insurance with Saga will increase by 42 per cent when it renews in seven days’ time. Colin, who works part-time as a witness for a sheriff officer, says he will shop around for cheaper cover after Saga said over the phone it would not offer him a discount.
‘I haven’t made a claim in 25 years,’ says Colin. ‘Insurers seem to operate according to their own rules. I’d urge readers to forget about loyalty savings and instead focus on shopping around when their cover renews. It’s the only way to get fair value for money.’
Colin’s final words to The Mail on Sunday: ‘Keep up your good work.’