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MSE News: Insurance renewal charges under investigation by FCA

edited 30 November -1 at 1:00AM in Insurance & Life Assurance
29 replies 4K views
Former_MSE_DarrylFormer_MSE_Darryl
210 posts
edited 30 November -1 at 1:00AM in Insurance & Life Assurance
"Insurance companies who charge existing customers more than new ones to renew their policies are being investigated by the new Financial Conduct Authority (FCA)..."
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Insurance renewal charges under investigation by FCA

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  • powerful_Roguepowerful_Rogue Forumite
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    Its nothing new.

    I can bet that the cheapest cover last year will be the most expensive when it comes up to renewal. Until you phone them up to cancel the auto renewal and then all of a sudden they can match the cheapest price that you have found.

    They only get one chance with me. I always tell them, if you can match the price, then you should have quoted me the cheaper price when you sent out my renewal.

    It certainly is a crafty technique and often win win for the insurance company.

    - Auto renewal at high price in which the customer dosent do anything

    - Phone up to cancel auto renewal as found it much cheaper elsewhere and they offer to price match
  • InsideInsuranceInsideInsurance Forumite
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    They only get one chance with me. I always tell them, if you can match the price, then you should have quoted me the cheaper price when you sent out my renewal.

    In some cases though you aren't actually price matching but simply getting them to lower their price.

    For me the same insurer has been the cheapest for sometime, and even more so now with my new car, but still if you phone them up to "see what they can do" they always take at least 20% off.

    As to the fairness of the whole thing, we will see what the FCA comes out with especially given the early statements that some new customer discounting is to be considered acceptable. For me I have never kept just auto renewing to see what the compound effect would be with my current insurers and with my previous clients the loadings certainly existed but you were talking a max of 30% (from memory) rather than the newspaper headlines of £800 -v- new business price of £250
  • millermiller Forumite
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    Maybe they would also like to take a look at this little gem from the RAC:
    In order for a Member to benefit from any new
    Membership offers or promotions, a period of 120
    days must elapse between the Member leaving RAC
    and rejoining. An application to rejoin during this
    120-day period will be treated as a renewal and
    priced accordingly.
  • rudekid48rudekid48 Forumite
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    This could possibly end up back-firing on a lot of people. All that will probably happen is an equalisation between new business and renewal rates, meaning that people who shop around every year will end up paying a lot more.

    The bubble had to burst eventually, the greed of the aggregators could not go unchecked forever - most are now looking to charge £75 for each policy sold, add that on to the significant (loss-leading) discounts that are given to get to the top of the comparison sites and it is simply not sustainable.

    Higher renewal premiums have subsidised discounts for those of us that shop around for a long time now, enjoy the cheap deals while you can - once this kicks in most of them will end....
    All matter is merely energy condensed to a slow vibration, we are all one consciousness experiencing itself subjectively, there is no such thing as death, life is only a dream, and we are the imagination of ourselves.
  • ReaperReaper Forumite
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    rudekid48 wrote: »
    The bubble had to burst eventually, the greed of the aggregators could not go unchecked forever - most are now looking to charge £75 for each policy sold, add that on to the significant (loss-leading) discounts that are given to get to the top of the comparison sites and it is simply not sustainable.
    In theory the aggregators charge should only affect new customers, not those renewing. So in theory it ought to be a brake on big discounts only being offered to new customers.
  • edited 11 July 2013 at 10:48AM
    Poppie68Poppie68 Forumite
    4.9K posts
    edited 11 July 2013 at 10:48AM
    Both my daughters have in the last week sold their cars. They were both up for renewal this week and their insurance doubled on renewal with their current insurer..both been driving for 3 years with no incidents or claims. We searched high and low for affordable insurance but the premiums were ridiculous for cars worth approx £500 each.

    The current insurers wanted £302 monthly payment were they were both paying £148 before, they were told they were on a new customer policy rate before, the cheapest new insurance option was £187 but a £459 upfront payment each...

    Anyway 2 bus passes were purchased at the weekend and a holiday is getting booked with the money they have just recieved for their cars from a local garage...
  • InsideInsuranceInsideInsurance Forumite
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    Poppie68 wrote: »
    Both my daughters have in the last week sold their cars

    On the basis you are talking about a single year then this is likely to be the fact that gender was outlawed as a rating factor for insurance at the end of last year and so many female drivers have seen a fair increase and many male drivers a smaller decrease as the two are harmonised.
  • mazcomazco Forumite
    10 posts
    Just had incredible example of this.
    My husband's cousin died yesterday at the age of nearly 90. She lived with her sister who is 75. They owned the house jointly and shared the bills but the elder sister paid for the house insurance.
    Today we spent some time with Brenda looking at practical details she needed to sort out immediately. We discovered that the insurance renewal was due on July 11th. She couldn't find the renewal quote but we checked bank statements and payments last year were £33.92 per month or over £400 for the year.
    We then went online and have found identical cover for £89.50 for the whole year.
    We are presuming that this year would have been more expensive than last year so I imagine it would have cost her around £450.
    If this isn't profiteering I don't know what is!
  • Will this action look into giving cashback to new customers (policies)?

    Will it also cover boiler insurance/maintenance polices ?

    There's other things that could be covered /looked into but probably not by this regulator. ( AA/RAC membership etc etc).
  • In some cases though you aren't actually price matching but simply getting them to lower their price.

    For me the same insurer has been the cheapest for sometime, and even more so now with my new car, but still if you phone them up to "see what they can do" they always take at least 20% off.

    As to the fairness of the whole thing, we will see what the FCA comes out with especially given the early statements that some new customer discounting is to be considered acceptable. For me I have never kept just auto renewing to see what the compound effect would be with my current insurers and with my previous clients the loadings certainly existed but you were talking a max of 30% (from memory) rather than the newspaper headlines of £800 -v- new business price of £250

    The point here, I think is that the insurance industry has, in my opinion, been ripping us off for YEARS!!!!!

    in the past, i went from a ford Escort Td, to a ford Transit, then a Mercedes E300 Td and (living in the same house) my insurance only changed by £20 bertween the lowest and highest!

    I currently pay £350 a year for a 2001 C220 CDI but had quotes in excess of £3k!!!!!

    To add insult to injury, they have also cut back on my cover! I was only paying £400 when i was 17!!!! by age 20 my insurance had reduced to £260 and gave me FULLY comprehensive cover on ANY car! I changed my car, and was told i had no need to inform them as my insurance covered me for ANY car!!!

    Now, with a so-called comprehensive policy, it really ISNT comprehensive at all! some dont allow the driving of other vehicles, even on a 3rd party basis, windscreen cover, hire car, legal expenses etc are all EXTRAS etc.

    my view is that if, like myself, you use a number of different cars (family, friends etc) then a COMPREHENSIVE policy should, by its very name, cover EVERYTHING making it the DRIVER insured, rather than the car, like it was on the policy i had when i was in my early 20's.

    Until then, I will carry on to shop around until I get the best deal FOR ME, like, im sure, many others will. I hope the investigation goes deeper than this, and uncovers insurers as the fraudsters that I feel that they are. They have NEVER paid out MARKET value for any car Ive owned, only BOOK value losing me some £1800 in 4 months, despite my insuring it with the value of the purchase price, AND having the receipt to prove this!
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