Car Insurance Automatic Renewal and Continuous Payment Arrangements

IW54

I am wondering if there are any plans by the FSA (or other responsible Organisation) to stop the automatic inclusion by Insurance Companies of a Continuous Payment Authority or Automatic Payment arrangements when new policies are taken out?

When payment is taken using a Credit or Debit Card this can be a problem (unless the Card expires before the renewal date).

Some (Most?) Insurers require the policyholder to call by phone to stop this. Often it is very difficult to get a response on these phone lines!

Surely, some action should be taken to require an 'opt-in' to such an arrangement rather than a default situation?

Slithery

You'd be better of asking on the motoring board as your question has absolutely nothing to do with buying and selling property...

Natbag

Insurers can't win. If they didn't do this, you'd have just as many people complaining that they've been stopped by the police for no insurance because their policy didn't renew as presumed/they forgot/they didn't receive their renewal letter. It's far easier to resolve a situation where a policy renewed but the policyholder didn't want it to and with far less fallout, than when it didn't renew and the policyholder did want it to.

MSE_ForumTeam5

We've moved this to the Motoring board for you

Herzlos

It's not going to happen, the automatic renewal is to prevent people being uninsured through lapses. That insurers also benefit from the inertia is not relevant.

If you were dealing with non-renewing insurance you'd need to be doing the same work anyway.

user1977

IW54 said:

Some (Most?) Insurers require the policyholder to call by phone to stop this. Often it is very difficult to get a response on these phone lines!

You ought to be phoning up in order to haggle over your renewal premium anyway (basic moneysaving practice...) - so if you don't get offered a good enough price, you can tell them during that call that you're not renewing.

forgotmyname

My insurer do not auto renew. Sometimes I wish they would but mostly I need to phone them and haggle on the

price anyway.

For 5 years or so they were always quite a bit cheaper than the comparison sites but over the past 3 or 4 years the
price fluctuates between my usual insurer and the comparison sites.

Sandtree

IW54 said:

I am wondering if there are any plans by the FSA (or other responsible Organisation) to stop the automatic inclusion by Insurance Companies of a Continuous Payment Authority or Automatic Payment arrangements when new policies are taken out?

When payment is taken using a Credit or Debit Card this can be a problem (unless the Card expires before the renewal date).

Some (Most?) Insurers require the policyholder to call by phone to stop this. Often it is very difficult to get a response on these phone lines!

Surely, some action should be taken to require an 'opt-in' to such an arrangement rather than a default situation?

The FSA is the Food Safety Authority and I have to say they have no plans.

The Financial Services Authority was split into the Prudential Regulations Authority (part of the Bank of England) and the Financial Conduct Authority in 2013.

The former FSA and the current FCA both actively support auto renewal. The number of uninsured drivers has reduced massively as a consequence and similar reductions have been seen with home insurance etc too, though generally there the impact of forgetting to renew a policy in time only impacts the family that made the mistake.

You are also mistaken on an expired card, continuous payment authority doesn't require the expiry date on subsequent payments and so card issuers that retain the same number have always continued to be able to take payment. With card updater introduce around 2007 Visa/Mastercard will give the insurer the new card number on the expiry of the original under a CPA.

What the FCA do require is that insurers inform you of the renewal with reasonable notice beforehand, unlike dating sites etc, and make it clear that no action means a renewal.

So no, a required opt-in is the last thing on the cards

spiro

What the FCA have been working on is the cost differnces car insurance companies charge. They are looking to outlaw charging different prices due to the sales channel (phone, online direct, etc) and also charging more for a renewing customer and a new customer.
If I accepted my auto renewal I would be charged over £150 more than a new customer for the same cover. Also according to MSE the ideal time to haggle is 21 days before your insurance expires.

Marvel1

Phone up and say you are not renewing - sorted.

Sandtree

spiro said:

What the FCA have been working on is the cost differnces car insurance companies charge. They are looking to outlaw charging different prices due to the sales channel (phone, online direct, etc) and also charging more for a renewing customer and a new customer.
If I accepted my auto renewal I would be charged over £150 more than a new customer for the same cover. Also according to MSE the ideal time to haggle is 21 days before your insurance expires.

Not in their latest paper, they say the ENBP that the renewal quote must be compared to has to be the pricing for the channel the original policy was bought through even if the customer switches channel at renewal (ie first policy bought online and they phone up about the renewal).

I can't quickly spot the previous FCA paper quickly on line but they do acknowledge that its likely that customers that currently do shop around each year are likely to end up paying higher prices under these proposed rule changes as insurers will not be able to sell policies below cost if they cannot rely on future years of higher premiums to balance the books.