Motor insurance auto renewal scam

rincydink

I swapped insurance on my car. Despite an email from the previous company confirming cancellation of the auto renewal, they still auto renewed. Individually, the unbudgeted removal of £400+ from a pensioner, could easily result in an overdraft.

Collectively, how much cash is generated for these companies, by  "accidental" renewals? Refunding your cash several days later, while it "rests" in the company accounts, must add up to a very tidy sum.

Typically, websites operated by these companies are masterpieces of obfuscation, especially if trying to move your cover elsewhere. 

DullGreyGuy

rincydink said:

Collectively, how much cash is generated for these companies, by  "accidental" renewals? Refunding your cash several days later, while it "rests" in the company accounts, must add up to a very tidy sum.

They'll obviously be making a loss.

In 20 years of working in the insurance industry I;ve never come across a single "accidental renewal" where its been confirmed a policy will lapse and but then an IT bug causes it to renew anyway so volumes are tiny. 

General Insurance like Motor has to hold very liquid funds because of the short tail nature of the insurance (vs Life or Pensions) and so a couple of percent PA return you are lucky. So lets say its 3% they get, in reality it will sit in a cash account for that duration for which they will get nothing but if somehow they invested it then £400 would generate 13p interest over 4 days.

Obviously you contact them to complain about this. An average call centre agent is going to be earning at £12/hr so when you layer on pension, bonus, etc a fully loaded is going to be circa £18/hr then add to that IT, their manager etc and roughly speaking its £27/hr. 

How long was your call? If your really lucky 5 minutes? More likely much longer when you consider the wrap up but thats at least £2.25.

So yes, they are making a killing by having to spend £2.25+ in staffing costs to attempt to "accidentally" earn £0.14... they'll be able to retire soon!

dunstonh

Collectively, how much cash is generated for these companies, by  "accidental" renewals?

Zero.   The admin in dealing with people who do not read their post costs more than the zero interest they are paid.

Refunding your cash several days later, while it "rests" in the company accounts, must add up to a very tidy sum.

zero interest is paid on business currrent accounts.

Typically, websites operated by these companies are masterpieces of obfuscation, especially if trying to move your cover elsewhere. 

Except the letter of renewal must make it clear what happens next.   So, all you need to do is read the renewal letter and it will say whether you need to tell them or not.

MalMonroe

rincydink said:

I swapped insurance on my car. Despite an email from the previous company confirming cancellation of the auto renewal, they still auto renewed. Individually, the unbudgeted removal of £400+ from a pensioner, could easily result in an overdraft.

Collectively, how much cash is generated for these companies, by  "accidental" renewals? Refunding your cash several days later, while it "rests" in the company accounts, must add up to a very tidy sum.

Typically, websites operated by these companies are masterpieces of obfuscation, especially if trying to move your cover elsewhere. 

I'm a pensioner and have to ask - why pick on us?! Any person with a low income would be just as financially inconvenienced, nothing whatsoever to do with age. £400 unexpectedly leaving my current account would NOT result in overdraft. I'm not even wealthy. But actually, like any good Martin Lewis devotee, my car insurance and breakdown cover, as well as all other car maintenance products, are paid via my credit card, which is then paid off in full. When auto-renewals happen the money goes from my credit card and is returned to that accordingly. So there is some breathing space but I don't need it.

Also, I think that £400 for car insurance is absolutely outrageous. The cost of my current, fully comprehensive AA car insurance with NCD protection is £197.41. I have been carefully driving for the past 37 years though, not sure if that helps? Or maybe the fact that my car is small-ish.

The only time it's auto-renewed has been when I have not paid attention to emails I've received a month before the auto-renewal. My own fault.

Whenever it has auto-renewed I've phoned the insurance company and successfully negotiated a more reasonable price. When they ask why I don't want to renew I just say 'because it's too expensive' and then they usually go away and 'speak to their manager'. Do they really? They always return with a more acceptable deal. If they don't I haggle some more.

I don't mind what happens as long as they never try to take £400 from me! My credit card could stand it but I couldn't. Far too expensive.

I recently accidentally didn't take action on a renewal email for RAC breakdown cover and that went through but after I phoned, my cover was increased to 15 months and the price was reduced to the same price I paid last year. Costing £65, which I don't think is bad for breakdown cover including home start, which is really the most important thing for me.

Things can always be put right via a phone call and if any company makes anything out of my own dilatoriness, well they probably deserve it!