Nationwide Contents Insurance premium increases

stb

Nationwide/Royal & Sun Alliance have had big problems with their renewal amounts this year. Multiple emails/letters stating incorrect amounts (including the claim that last year's premium was more than double what it actually was). They sent some sort of apology letter about the whole thing, mention that RSA had not fulfilled their legal obligations.


Finally they settled on my renewal amount being the same as last year. I asked them why this was, since I have another year of no claims.


Initially, they said that the increase in premium exactly matched the increase in no claims bonus, offsetting to the penny. I told them this was totally unbelievable and there is no way the risk of the house/area + inflation was the same to the penny as the no claims bonus. The customer service person insisted this it is very common (?!) for people to pay the same amount to the penny every year. She did refer it to the pricing team though.



The pricing team have come back with the same answer. When pressed, they admitted that it is not just a coincidence: it is more that they have chosen to honour the renewal amount from last year (probably due to their earlier calculation and messaging mistakes). They implied that this is better for me, but without knowing what the true amount for this year is I cannot tell. They are now saying that it should be better for me because premiums always increase by more than the no claims bonus.


When pressed on this, they said premium increases depend on the area, criminality etc., all obvious stuff. They could not, however, actually explain the expectation that premiums always increase by more than no claims bonuses. This seems especially strange to me with Nationwide being a mutual. It also somewhat contradicts an earlier claim made on the phone that people with maximum no claims are likely to pay the exact same amount every year. If premiums were always increasing so much, then this would obviously not be the case.



I haven't had UK insurance for a while, so I have some questions for the rest of you:


1) does this all sound as dodgy to you as it does to me? Or it normal practice?

2) if it is dodgy, is there anything preventing intentional negation of the no claims system, or is it simply "buyer beware"?

3) when a company is required to honour a quote they have already given, are they required to honour the final amount (i.e. after no claims) or the gross premium quote (before no claims)?
4) is it indeed normal for all premiums to rise every year, regardless of area, inflation etc? This seems especially unlikely to me. Although I cannot tell what their risk profile looks like for my area, it is not especially criminal. The no claims increase is substantially more than inflation. Whilst it's always a possibility, I cannot see why I would expect the net amount to increase.

Quentin

MSE advice is never simply renew


Follow the advice in the MSE guide to cheap home insurance (link in quick links at the top of the page) and do some research before deciding to renew

stb

I am not simply renewing - hence the questions. I don't think the guide deals with those questions directly. Perhaps this section?


"Insurers charge more each year, knowing inertia stops policyholders switching. And even though new rules mean insurers must now tell you the premium you paid last year in correspondence to you, don't rely on this to take action."


Is this implying that it is in fact the case that they will make an overall (net) increase as standard to take advantage of inertia? The last time I had regular insurance in the UK this did not seem to be the case.

Quentin

You won't know if you don't research the market, but generally loyalty is not rewarded


Insurers change their business model all the time

paddyandstumpy

stb wrote: »

Nationwide/Royal & Sun Alliance have had big problems with their renewal amounts this year. Multiple emails/letters stating incorrect amounts (including the claim that last year's premium was more than double what it actually was). They sent some sort of apology letter about the whole thing, mention that RSA had not fulfilled their legal obligations.


Finally they settled on my renewal amount being the same as last year. I asked them why this was, since I have another year of no claims.


Initially, they said that the increase in premium exactly matched the increase in no claims bonus, offsetting to the penny. I told them this was totally unbelievable and there is no way the risk of the house/area + inflation was the same to the penny as the no claims bonus. The customer service person insisted this it is very common (?!) for people to pay the same amount to the penny every year. She did refer it to the pricing team though.



The pricing team have come back with the same answer. When pressed, they admitted that it is not just a coincidence: it is more that they have chosen to honour the renewal amount from last year (probably due to their earlier calculation and messaging mistakes). They implied that this is better for me, but without knowing what the true amount for this year is I cannot tell. They are now saying that it should be better for me because premiums always increase by more than the no claims bonus.


When pressed on this, they said premium increases depend on the area, criminality etc., all obvious stuff. They could not, however, actually explain the expectation that premiums always increase by more than no claims bonuses. This seems especially strange to me with Nationwide being a mutual.
Nationwide is just the brand in front of the policy, it's actually underwritten by a totally different company, who are not a mutual and are a 'for profit' plc.

It also somewhat contradicts an earlier claim made on the phone that people with maximum no claims are likely to pay the exact same amount every year. If premiums were always increasing so much, then this would obviously not be the case.



I haven't had UK insurance for a while, so I have some questions for the rest of you:


1) does this all sound as dodgy to you as it does to me? Or it normal practice?
The practice of telling you last years price is a relatively new FCA requirement. Whilst I'm not defending the insurer or Nationwide for getting it wrong, it's not always a simple thing to make this change, correctly and on time. It would appear they made a mistake, and held their hands up to this. I very much doubt there is anything 'dodgy' going on, as the repercussions would far outweigh the gains.

2) if it is dodgy, is there anything preventing intentional negation of the no claims system, or is it simply "buyer beware"? It's not dodgy.

3) when a company is required to honour a quote they have already given, are they required to honour the final amount (i.e. after no claims) or the gross premium quote (before no claims)?
There is no legal obligation to honour any quote given, usually it's a commercial decision to honour mistakes to save a potential complaint. If they honour a price, I'd expect them to honour the final price not a price part way through the rating process!

4) is it indeed normal for all premiums to rise every year, regardless of area, inflation etc?
Claims inflation is usually the main reason for increases and happens yearly.
Then there is changes to insurers appetite and perception of risk profiles to factor in, and the resultant change to their rating.
This seems especially unlikely to me. Although I cannot tell what their risk profile looks like for my area, it is not especially criminal. The no claims increase is substantially more than inflation. Whilst it's always a possibility, I cannot see why I would expect the net amount to increase.
As no claims (and indeed any) discount is a commercial decision there is no obligation for them to increase the discount just because you are claim free for a further year.

As mentioned in another post if you're not happy with the price shop around then vote with your feet.

Chickenlips

No claims on house insurance do not work the same way car insurance no claims do. This is, in part, due to the fact that claims are not fault/no-fault like car insurance claims.

With home insurance, the discounts for no claims are quite low but the penalty for having claims can be quite high. People who have had one house claim can be more likely to have further claims.

The risk profile also takes into account a lot more than the general area. The types of claims they see and payouts can influence premiums. The increased bad weather also impacts premiums as storm claims are on the increase. There is also the fact that fraudulent claims that go undetected push up the premiums for all.

If you're unhappy with the proposed premium, there are plenty of other insurers out there to consider.

stb

paddyandstumpy wrote: »

As no claims (and indeed any) discount is a commercial decision there is no obligation for them to increase the discount just because you are claim free for a further year.

Unless it forms part of the contract.


In general, companies can also get into hot water if they offer false incentives such as discounts that are recouped elsewhere (see e.g. Which? "Argos putting up prices free addons"). That is what I'm talking about here. It seems pretty clear to me that they are intentionally recouping the "no claims bonus" that they originally offered.

stb

Chickenlips wrote: »

No claims on house insurance do not work the same way car insurance no claims do. This is, in part, due to the fact that claims are not fault/no-fault like car insurance claims.

Good to know, thanks.

Chickenlips wrote: »

With home insurance, the discounts for no claims are quite low but the penalty for having claims can be quite high. People who have had one house claim can be more likely to have further claims.

I did not consider this before adding accidental damage. Presumably, this means a claim for accidental damage can easily be sufficiently detrimental as to not be worth making (via raised premiums/loss of no claims).

Chickenlips wrote: »

The risk profile also takes into account a lot more than the general area. The types of claims they see and payouts can influence premiums. The increased bad weather also impacts premiums as storm claims are on the increase. There is also the fact that fraudulent claims that go undetected push up the premiums for all.

Of course but you would still not expect the increase to match the no claims bonus to the penny unless it was intentional.

davidwatts

stb wrote: »

Of course but you would still not expect the increase to match the no claims bonus to the penny unless it was intentional.

Given the (slightly convoluted) way this was explained to you by the insurer I suspect it's simply a commercial decision to not increase premiums for certain customers (especially those with acceptable claims experience). A new premium is calculated reflecting this year's rates and any increase in no claim discount. If this is less than last year's premium this is what you'll be charged at renewal. If it is more, the premium is discounted or "capped" to match what you paid last year.