Direct Line Home insurance renewal and 'Loyalty Penalties'

Roy1234

I've insured my home & contents with Direct Line on & off for many years.  The 'on' periods as I find their default cover much more generous than many, especially for jewellery away from the home.  But the 'off' periods due to their historic hiking of prices even without a claim or change of circumstances.  Some years I've managed to haggle my renewal quote down to that of a new customer by getting a web quote from them in false name, something their phone staff actually expected(!), though lately I note their quote software is getting wise to this; subtle changes to address as well as name may be necessary to get a truly fresh customer quote.

But now we have the FCA action on taking away loyalty penalties, which I hoped would put an end to this.  But it seems perhaps not. I've just ended my latest 'first year as a new customer' with DL but have seen a 23% premium rise, from £346 to £424, despite no claims or changes in circumstances.  I then as now have about £9k in jewellery insured away from the home, tricky with some insurers, otherwise everything is pretty default, many years of no claims, and not in a crime hotspot either.

Getting DL quotes in nearby false names & address to outwit the software algorithm is now giving prices as high as £604.  Now I realise we live in some madly inflationary times, but Google says insurance has risen only about 3% this year.  So, is this 23% rise a fair reflection of high inflation times or not?

dunstonh

But it seems perhaps not. I've just ended my latest 'first year as a new customer' with DL but have seen a 23% premium rise, from £346 to £424, despite no claims or changes in circumstances.

The increase seems entirely logical as you have lost the early discounting that you had initially.

 but Google says insurance has risen only about 3% this year. 

Google is wrong.  It doesn't work like that.

So, is this 23% rise a fair reflection of high inflation times or not?

Part inflation. Part removal of early year discounting.

Roy1234

dunstonh said:

But it seems perhaps not. I've just ended my latest 'first year as a new customer' with DL but have seen a 23% premium rise, from £346 to £424, despite no claims or changes in circumstances.

The increase seems entirely logical as you have lost the early discounting that you had initially.

 but Google says insurance has risen only about 3% this year. 

Google is wrong.  It doesn't work like that.

So, is this 23% rise a fair reflection of high inflation times or not?

Part inflation. Part removal of early year discounting.

You say Google is wrong.  But how can it be so very wrong?  Does this annual rise ring true with other customers, especially of DL?

I've tried a comparison site and More Than appear to be offering cover for about £200 with excesses set right down and everything as similar re cover as I can set it.  Given introductory discounts are supposedly gone, and we are told insurance is a competitive market without fat profit margins, can anyone explain how two major insurers can produce such wildly different quotes?

dunstonh

You say Google is wrong.  But how can it be so very wrong?  Does this annual rise ring true with other customers, especially of DL?

Does Google know the margins and the costs incurred in every postcode by every insurer?

Given introductory discounts are supposedly gone, and we are told insurance is a competitive market without fat profit margins, can anyone explain how two major insurers can produce such wildly different quotes?

One doesn't want you that much.  One may want you more.  Different insurers have different views on risks.  They also have different target markets.  If you went from the top of a comparison to the bottom you would find quote differences probably in the thousands.   Those at the bottom really do not want you at all and price to put you off.   Those at the top are looking to buy market share and increase business.   They may also be willing to buy market share a that expense of profit.

There is also the issue that the actuaries really don't know how the market is going to evolve this year and the next years following the removal of early-year discounting.   So, you are seeing differences in pricing due to differing opinions.

Roy1234

OK, but why would DL want me less this year than last year if I haven't claimed?

And can any other forum members maybe post what their annual premium rise has been if in similar no claim/change situations?

Sandtree

Roy1234 said:

OK, but why would DL want me less this year than last year if I haven't claimed?

And can any other forum members maybe post what their annual premium rise has been if in similar no claim/change situations?

They cannot offer you any discount any more... traditionally they offered a big discount on year 1 and tapered it off over a few years. That in a large part was funded by customers who'd been there for 10 years paying full price.

So now you are seeing the average price from last year plus inflation but as you were at the top of the discount curve last year you will have seen a notable increase whereas that customer who funded you last year has seen a discount.

Industry averages include people switching and so those lured by those doing market grab and exiting those in pseudo run off/cash cow mode. You cannot use it to compare your insurance renewal with your own insurer.

Aretnap

There really is no mystery as to why your renewal premium has gone up. Last year you got a whopping big discount because you were a new customer. This year you don't get the whopping big discount because (a) your not a new customer and (b) new customer discounts are banned in any event.

Unless you were expecting insurance companies to give everyone the heavily discounted (to the point of being loss-leading) prices that they used to offer new customers, the fact that your renewal premium is significantly higher should really not come as a surprise.

chrisw

It's best not to think about it too much and it's pretty irrelevant anyway.

Just go with the company that has the best price whilst meeting your needs, whether that's DL or someone else.

TELLIT01

I'm not sure when the new FCA rulings came into effect.  If the OP had a new customer discount in the first year they will find a considerable increase in subsequent years as they no longer get that discount.

dunstonh

TELLIT01 said:

I'm not sure when the new FCA rulings came into effect.  If the OP had a new customer discount in the first year they will find a considerable increase in subsequent years as they no longer get that discount.

January.  So, this will be the first renewal on the new method and the OP said they bought it last year.  So, you hit the nail on the head for the primary reason.