Automatic renewal mugging

JPreston

I feel like I have just been mugged by my motorbike insurer Bennett's, and would like to hear what people think about 'automatic renewal'.

A year ago I took out an insurance policy with Bennett's. They wrote to me one month before the policy expired, explaining that unless I phone their 0844 number they would automatically renew my policy. They also increased my premium by 60% for no reason I can see - I'd made no claim, they used the same info I provided last year, and I now had another year's NCB. The main problem is, I was overseas travelling at the time, and share an unsecure letterbox in a shared house, and between these two factors I only caught sight of Bennett's letter to me today, nine days after the renewal date. My motorbike is currently off the road, locked in a private garage and does not need to be insured, although I've kept it taxed for convenience.

I phoned them up and was informed that I can cancel the renewal (which I did not agree to in the first place), but that I would receive back only about £100 of the £160 premium charged. The rest would be taken up by a £20 'renewal fee' (A WHAT? Don't they want people to renew then?), a £30 cancellation fee, and apportioned cover for the nine days (which I did not ask for, did not require, and did not want). The agent also lied to me in saying that he could issue a full refund if and only if I had declared the bike SORN, but since I had kept it taxed it would be illegal for me to have kept in uninsured these past nine days. This is not true - third party insurance is required only where a vehicle is kept (or used, obviously) on a public road. My bike is in a locked private garage, I am not using it, there is no legal requirement for me to insure it (what conceivable third party risk is there anyway?) or to declare it SORN as I continue to tax it. I pointed this out but the agent said that I was the one mistaken - the muppet :rolleyes: - but at least the whiff of a full refund is in the air.

What I object to is that because I provided Bennett's with my credit card details in September 2008 in order to buy a 12 month policy, they feel justified in keeping my payment details on file and taking a completely separate and increased payment a year later, after sending one letter to me (while I was overseas) to tell me that if I don't call their 0844 number (I only have a mobile, so this particularly grates) they will issue another policy (while the bike is off the road, and for all they know I've sold it) at a much less competitive price. I feel that I have effectively been fined ~£60 by Bennett's for not receiving their renewal notice earlier.

I consider this nothing less than misuse of my credit card details - flat-out fraud - I did not consent to the renewal in any way. I will struggle on with their Complaints Dept, complain to my credit card provider, and generally kick up as much fuss as I can (I'd really appreciate any tips...), but there is no guarantee I'll get my money back.

So what do people here think about the way insurance companies now automatically renew policies, placing the onus on the customer to be contactable in approximately a year's time and to call their 08* numbers to 'opt-out'? Is it a fair tactic, or daylight robbery?

EDIT: I will also add that no mention is made anywhere in writing of the £20 'renewal fee'. Not surprisingly - what company would own up to charging its loyal, renewing customers a special fee just for the privillege of remaining customers? They even present the premium details in a dishonest fashion like so:

Premium £110
Legal protection £30
Total: £160

Now that just doesn't add up, does it? At least now I know where the missing £20 is. So when a charge is not in the Key Facts of the policy, is nowhere mentioned in the renewal letter, how can they still charge my credit card in respect of it?

gordikin

You'll likely find that they told you about the automatic renewal somewhere in the agreement when you took out the insurance originally. You'll have got cheaper insurance a year ago as a new customer...hence the apparent 60% price increase. If your bike's battery fails and shorts and causes a fire which burns down the garage and anything else around it, will you pay out for the damage?

JPreston

gordikin wrote: »

If your bike's battery fails and shorts and causes a fire which burns down the garage and anything else around it, will you pay out for the damage?

Why, would Bennett's? Why do you assume I have TPF&T cover as opposed to Theft only? My bike's battery is disconnected (and the tank is drained), thanks for asking. Everything else in the garage is owned (and insured) by me. You'd have to work very hard indeed to come with a third party risk or moral reason why I should have insurance in my situation, but in any case there is no legal obligation to insure the vehicle at all as usually gets trotted out when someone is talking about a car.

Specifically though, what do you think about the 'renewal fee'? The words 'renewal fee' appear nowhere on any document, it's only when phoning them up and asking why 110 plus 30 apparently makes 160 according to their schedule that they admit to charging it at all. How can I have consented, even tacitly, to pay a fee which is nowhere written down? How can it be legal to charge it to my credit card?

noh

A Renewal Arrangement fee of up to £30 is mentioned in their T+Cs here:-
http://www.bennetts.co.uk/Terms-and-Conditions/

raskazz

That's a very long post which I could take longer to pick apart but fundamentally you should take responsibility for what you sign. It's also not their fault that you share a letterbox. Something tells me you would have been mighty relieved that the policy renewed if your bike had been nicked while you were away.

Bike insurance premiums are so low that unless intermediaries charge administration fess they cannot make money. Say the commission on the premium is 12% - that would mean that they only take £13 even if the policy ran for a whole year, without any renewal fee. Now as a result of your inaction you are requesting cancellation so they are not only losing on that small amount but also incurring extra costs in cancelling. The figures given are pretty fair IMO.

dunstonh

I cant see a problem with automatic renewal.

1 - you do agree to it in the T&C you agree to.
2 - when you get your renewal letter it tells you what to do next if you do/do not want to renew.
3 - most people do renew with the same company so the majority benefit from this
4 -those that dont read their paperwork and are poor at admin are prevented from driving uninsured.

In this case, the bennetts T&Cs are quite clear in that the key charges are listed right at the top and its only a short read. If printed, it would be one side of A4 and can be speed read in about 1 minute.

There are plenty of areas you can pick bad things out from insurers etc but this really isnt one of them. Those that complain about it are just deflecting the fact that they messed up by not taking any interest in what they are buying and/or reading the paperwork issued.

JPreston

raskazz wrote: »

That's a very long post which I could take longer to pick apart but fundamentally you should take responsibility for what you sign. It's also not their fault that you share a letterbox. Something tells me you would have been mighty relieved that the policy renewed if your bike had been nicked while you were away.

Sorry if your attention span isn't up to reading the detail I provided, but no-one was forcing you either to read it or to reply. The problem with self-righteous replies along the lines of 'what if I wanted to claim' is this: I did not want or need insurance. Had my bike been nicked I doubt I would have been covered (I was away for a long time, and could not have reported the theft on any timely basis) but even if I were I would not have claimed for the loss - the value of my bike minus excess is less than the premium increases I would expect to see as a result of making a claim.

dunstonh wrote:

I cant see a problem with automatic renewal.

1 - you do agree to it in the T&C you agree to.
2 - when you get your renewal letter it tells you what to do next if you do/do not want to renew.
3 - most people do renew with the same company so the majority benefit from this
4 -those that dont read their paperwork and are poor at admin are prevented from driving uninsured.

In this case, the bennetts T&Cs are quite clear in that the key charges are listed right at the top and its only a short read. If printed, it would be one side of A4 and can be speed read in about 1 minute.

There are plenty of areas you can pick bad things out from insurers etc but this really isnt one of them. Those that complain about it are just deflecting the fact that they messed up by not taking any interest in what they are buying and/or reading the paperwork issued.

Thank you for you well-reasoned points, but I feel I can address each of them:

1 - yes, but agreement is only tacit and opt-in is by default, I cannot see how this behaviour is intended to do anything other than harm the consumer.

2 - Setting aside the fact that in my case I only received the letter after the renewal date, the only way given to avoid renewal is to call an 0844 number - which I regard as a cynical method to gouge further pennies out of customers. I shouldn't have to phone a company at my expense to stop them making unauthorised charges to my credit card, after I provided them with these details for a one-off transaction a year ago.

3 - It's true that most people renew without thinking, although I would not expect them doing so to be defended on this site! However I have read that renewal percentages increase from 70% to 90% when companies enact a policy of auto-renewal. I argue that this extra 20% of customers have therefore suffered as a result, as they would have found cheaper insurance elsewhere (or like me, no longer required insurance) but were unable to extricate themselves from their policies.

In my case, it is only because Bennett's renewal premium is so outrageously expensive and increased that even if I end up paying their £60 fees, it will still cost me £30+ less to insure my bike with a competitive insurer than it would to allow the auto-renewed policy to run. This also gives lie to the excuse that margins are low for bike insurers; Bennett's charged me £160 whereas a similar policy is less than £70 - so Bennett's can take £60 for no risk at all, and I can still insure my bike and save £30. That's a very healthy margin by my reckoning.

4 - Annual reminders (and hefty penalities for driving uninsured) worked for many years to discourage people poor at admin from uninsured driving. While there may be the odd honest mistake, I would say the vast majority of uninsured drivers do so knowingly and intentionally. Since Bennett's took the opportunity of my being away and not contactable to vastly hike up my premium, I feel that this has rather more to do with profiteering than concern for the legality of my driving (and when did Bennett's become criminally liable for my actions anyway?).

Those that complain about it are just deflecting the fact that they messed up by not taking any interest in what they are buying

I think it is reasonable for consumers to take minimal interest in what they buy if they so wish, I don't think it's 'messing up'. Particularly with something as complicated as an insurance policy, I know I am predominantly concerned with fulfilling my legal obligation to have insurance (at such time as I am in fact obliged) and do not think it acceptable that it should somehow come down to the consumer to proactively take action to prevent such sharp practices as automatic renewal. I really think consumer protection law should step in at this point, to prevent the 'opt-in' for auto renewal being tacit and by default. Now I know this is not the case currently (although perhaps we will see this in future), but in the meantime I think it's certainly something to complain about :beer:

mattymoo

JPreston wrote: »

4 - Annual reminders (and hefty penalities for driving uninsured) worked for many years to discourage people poor at admin from uninsured driving. While there may be the odd honest mistake, I would say the vast majority of uninsured drivers do so knowingly and intentionally. Since Bennett's took the opportunity of my being away and not contactable to vastly hike up my premium, I feel that this has rather more to do with profiteering than concern for the legality of my driving (and when did Bennett's become criminally liable for my actions anyway?).

Unfortunately the system was not working. Correct, there are many drivers out there who stick 2 fingers up to the idea of insuring a vehicle. Things like the MID database and ANPR cameras are steadily removing these from the road.

I've seen the situation from quite a few angles during my insurance career. As a surveyor I've seen the car pounds where the uninsured vehicles go pending crushing. You'd be surprised how many late reg Audi's and BMW's are in these places. These are the "forgot to renew" brigade.

I've dealt with the claims on behalf of the MIB. This was pre-MID and ANPR / auto renewal etc but the failure to renew or put alternative cover in place was the number one reason for having no cover at the time of the accident.

Finally, I also personally know somebody who was involved in a collision that resulted in injuries. They were not insured at the time because their husband had failed to renew / sort out the insurance. The eventual settlement for the innocent, injured person exceeded £1m.
With 32,897,000* vehicles on the UK roads, this one claim will have added 3 pence to the cost of every vehicles insurance. Uninsured motorists though add £30 to everyones premium via the levy to the MIB. Gives an idea of the scale of the problem.

* - source http://www.whatcar.com/car-news/number-of-cars-on-uk-roads-increases/219239 I appreciate this is a vehicle count whereas the MIB £30 figure is per policy so it is not a direct compare.

Markyt

I hate autorenewal. I have now started emailing the provider when I take out a new policy, telling them I do not wish to renew automatically. Email means I have a record of the contact if they don't bother, so I can refer them to it when they send me the usual 'you don't need to anything' carp. The policies usually say you have to notify them if you don't want aut-renewal, but they don't say when, so doing it at the start of the policy means its fresh in my mind. An alternative to email is to send a signed note in when you send your no claims or acceptance forms back to them.

Rockporkchop

Auto renewal was very useful for me on one occasion as it meant that my car remained insured when I unexpectedly spent a few months in hospital.

I would never normally renew with the same insurer though and usually start shopping around the month before my policy expires.

Proc

Ctrl+C
Ctrl+V

I think it's about time we made a sticky thread entitled "YES INSURANCE COMPANIES DO AUTO-RENEWALS" with the reasoning for it in the thread.

You guys must be sick to death of explaining the same crap to a different set of idiots each week.