Early car insurance renewal: quoted premium doubles on key policy start-date!

AntiMan

I wanted to share with interested users an experience I had today when renewing my car insurance. My current provider brought in a hike. I did a new go-compare search and followed up on quotes from two competitive providers.

Existing policy expiry date was 12 Dec 2024. My quotes were raised on 19 Nov 2024: 23 days ahead of necessity.

All the new quotes were initially given for a policy start date on the day the quotes were raised (not the date of current policy expiry). So, after clicking through to my chosen providers, I amended the start date of the new quotes, so as not to lose 3 weeks cover. This is what I found (prices in whole pounds only):

Provider A:
Initial quote of £217 given for start date on day of quote (19 Nov 2024), then:
Small incremental price increases as start date is pushed forward towards December, then;
Massive price jump to £400+ for any start date after 7 Dec 2024.

Provider B:
Initial quote  of £183 given for start date on day of quote (19 Nov 2024), then:
Small incremental price increases as start date is pushed forward towards December, then;
Massive price jump to £500+ for any start date after 5 Dec 2024.

Out of interest: both providers seemed to be using the same basic website 'skin' for the quoting process; and, given the pricing behaviour, perhaps the same algorithm to create the prices. In each case, changes in underwriter were often concurrent with the start-date related price changes.

Lesson (for me, anyway): 
Do not assume that the mere fact of seeking car insurance renewal several weeks ahead of necessity delivers the best price. Especially, do not assume that the further ahead you seek to renew the better the offer. Experiment with shaving a few days off the new policy start date (i.e. overlapping with your existing policy), and see what effect it has on the price.

Emmia

AntiMan said:

I wanted to share with interested users an experience I had today when renewing my car insurance. My current provider brought in a hike. I did a new go-compare search and followed up on quotes from two competitive providers.

Existing policy expiry date was 12 Dec 2024. My quotes were raised on 19 Nov 2024: 23 days ahead of necessity.

All the new quotes were initially given for a policy start date on the day the quotes were raised (not the date of current policy expiry). So, after clicking through to my chosen providers, I amended the start date of the new quotes, so as not to lose 3 weeks cover. This is what I found (prices in whole pounds only):

Provider A:
Initial quote of £217 given for start date on day of quote (19 Nov 2024), then:
Small incremental price increases as start date is pushed forward towards December, then;
Massive price jump to £400+ for any start date after 7 Dec 2024.

Provider B:
Initial quote  of £183 given for start date on day of quote (19 Nov 2024), then:
Small incremental price increases as start date is pushed forward towards December, then;
Massive price jump to £500+ for any start date after 5 Dec 2024.

Out of interest: both providers seemed to be using the same basic website 'skin' for the quoting process; and, given the pricing behaviour, perhaps the same algorithm to create the prices. In each case, changes in underwriter were often concurrent with the start-date related price changes.

Lesson (for me, anyway): 
Do not assume that the mere fact of seeking car insurance renewal several weeks ahead of necessity delivers the best price. Especially, do not assume that the further ahead you seek to renew the better the offer. Experiment with shaving a few days off the new policy start date (i.e. overlapping with your existing policy), and see what effect it has on the price.

The only difficulty is if you take policies out like this, and have to make a claim in the overlapping period. Which insurer pays?

Claiming twice is fraud, so each insurer should pay 50%  but that's not a usual method of operation, will cause complications, and likely delay paying out 

You might also end up paying two lots of excess, since that is usually "the first £xx of any claim"... And you'd be making two claims.

DullGreyGuy

AntiMan said:
Out of interest: both providers seemed to be using the same basic website 'skin' for the quoting process; and, given the pricing behaviour, perhaps the same algorithm to create the prices. In each case, changes in underwriter were often concurrent with the start-date related price changes.

Given you talk about underwriter then you are likely going via some form of intermediary. 

Many companies operate under multiple brands and each brand will have a very similar look and feel to the function of their site. Similarly many smaller intermediaries simply buy off the shelf software rather than building custom software themselves so again each user of the same software package are likely to have similar flows. 

The fact that the underwriter is changing is what's key here. It could be ABC is coming off the panel at the end of November and coincidently they are the cheapest for you. So quote before end Nov and their price is shown. Quote post Nov and you are seeing the price of the next cheapest. 

AntiMan

Points taken. 

- Given that the policy overlap in my case is only 6-7 days and the price differential is hundreds of pounds, I'm happy to exercise my own judgement re. holding two policies for a short period. If I need to claim for any reason in the overlap period it will be under only one of the policies.

- In the case I describe, the important point about the price jump is the size of it (100%+), and the fact that it is effectively concealed from the consumer unless they go through a day at a time altering the start date of their coverage in the quote. My guess is that most will merely amend the start date, thinking that they are saving money by eliminating a three-week overlap, then assume that the price has doubled due to some "unavoidable" market fluctuation (even at a time when insurance premiums are said to be levelling out). 

- I have a good sense of how companies of all kinds use the tools of digital delivery to create complexity around consumers. What's interesting is how obvious some of the tactics are if you have time to probe and test as you engage in various online actions. Regarding accessing different insurance providers online: some aspects of the apparent complexity seem to be almost just visual -yes, due to the use of off-the-shelf software. But this adds to a sense that the market itself is complex, making it seem unfathomable and exhausting to the consumer, disincentivising inquiry.
- Pricing (and other) algorithms are not  forces of nature. They are set up by human agents to deliver particular outcomes in response to particular inputs. Poke them by varying your input, and find out.

Emmia

AntiMan said:

Points taken. 

- Given that the policy overlap in my case is only 6-7 days and the price differential is hundreds of pounds, I'm happy to exercise my own judgement re. holding two policies for a short period. If I need to claim for any reason in the overlap period it will be under only one of the policies.

The insurer will know you've got another policy elsewhere... It will be flagged up in the event of a claim, and so they may decline to pay out for the full claim.

DullGreyGuy

Emmia said:

AntiMan said:

Points taken. 

- Given that the policy overlap in my case is only 6-7 days and the price differential is hundreds of pounds, I'm happy to exercise my own judgement re. holding two policies for a short period. If I need to claim for any reason in the overlap period it will be under only one of the policies.

The insurer will know you've got another policy elsewhere... It will be flagged up in the event of a claim, and so they may decline to pay out for the full claim.

That depends on their systems, in my claims days ours didnt but it was a question asked. 

They cannot simply decline to pay out, in the first instance they have other liaise with the other insurer and find out what each company's respective co-insurance terms are. If they are both "won't pay if co-insured" then they will see if one policy has higher priority over the other and assuming not then they will simply have to share the costs. 

For Motor, which tends to be unlimited TP cover and Market Value for own vehicle its 50/50. In a different scenario like home where one policy may be £75k and £20k jewellery but the other is Unlimited general and £15k jewellery it becomes much more complex on the cost sharing arrangement. 

All of this adds delay but will ultimately get settled. 

AntiMan

I accept the necessity for car insurance, and my legal obligations. However, I would feel foolish if I allowed myself to be twisted out of shape mentally or financially by rules that companies invent for their own benefit, embed in consumer-facing technology, and will change as and when they see fit.

The case I've described is a small indication (among others) that the relationship between prospective insurers and customers is already riven with bad faith. Jumps in premium of 100%+ from a particular day onwards obviously have nothing to do with the risk presented by a particular customer (once said to govern premiums), or with the quality of any insurance policy being offered... so I'm happy to game the pricing algorithms in any way I can to save money.

That's the spirit in which I left the account of my recent experiences.

In a case like the one I described (with a policy overlap of 5-6 days): by all means pay double the premium for a new policy that doesn't overlap with the old, if you want perfection in that respect. Or use judgement, take care, and if really scared that some insurer might give you a hard time in the event of a claim... just don't use the car for a few days!

I don't want to spend any time looking into it, but is it not possible to withdraw from an insurance contract? I mean, electively, at any time, for any reason, accepting the loss of any "unused" portion of a premium? If so, it's easy to get around the possible dangers of holding two concurrent policies by cancelling the existing one on the day the new one takes effect. I am not concerned enough to bother with that for a period of a few days.

Sarahspangles

It’s interesting as the standard advice is to get a quote 21 days in advance, with the premium quoted rising the closer you get to renewal. If insurers are amending their algorithm to charge more for people who are organised, that needs revisiting. Alternatively, is there something ‘special’ about early December renewals - people buying cars for other people that they write off over Christmas?!

XRS200

AntiMan said:

I don't want to spend any time looking into it, but is it not possible to withdraw from an insurance contract? I mean, electively, at any time, for any reason, accepting the loss of any "unused" portion of a premium? If so, it's easy to get around the possible dangers of holding two concurrent policies by cancelling the existing one on the day the new one takes effect. I am not concerned enough to bother with that for a period of a few days.

Most policies allow cancellation mid term, may be a fee to pay though.

Some provider at the bottom end may have an issue accepting NCD which is still in use on another policy.

DullGreyGuy

AntiMan said:

I don't want to spend any time looking into it, but is it not possible to withdraw from an insurance contract? I mean, electively, at any time, for any reason, accepting the loss of any "unused" portion of a premium? If so, it's easy to get around the possible dangers of holding two concurrent policies by cancelling the existing one on the day the new one takes effect. I am not concerned enough to bother with that for a period of a few days.

There is no legal requirement for them to allow you to cancel once the cooling off period has ended but in practice most insurers do and in particular for Motor where they have legal obligations under the Road Traffic Act. As mentioned above, most charge fees for cancelling the policy early so you would need to factor those in. 

Sarahspangles said:

It’s interesting as the standard advice is to get a quote 21 days in advance, with the premium quoted rising the closer you get to renewal. If insurers are amending their algorithm to charge more for people who are organised, that needs revisiting. Alternatively, is there something ‘special’ about early December renewals - people buying cars for other people that they write off over Christmas?!

That advice came from before the rules changes for Motor and Home that renewing customers cannot be charged more than new business quotes. Most insurers do their renewal quotes in the 28-21 day window as the rules require insurers to provide "sufficient notice" 

AntiMan

Sarahspangles said:

It’s interesting as the standard advice is to get a quote 21 days in advance, with the premium quoted rising the closer you get to renewal. If insurers are amending their algorithm to charge more for people who are organised, that needs revisiting.

It does look as if organised consumer behaviour might have been "incorporated" into the online quoting process so that companies (rather than consumers) can benefit from a trend in early renewal. If change is embedded in code it's invisible to a consumer unless they really probe, or "game" the quoting process. 

I cannot be sure (and surely no industry rep. will admit it, if is the case) but it seemed as if a kind of bait-and-switch was in play: offers being pitched to draw my attention by appearing very competitive, only to change dramatically when the policy start-date was changed to coincide with the expiry of my existing policy... with a 4-5 day buffer added backwards, in case I experimented by going back a day or two to test the offer. In the event, I tried changing the date one day at a time, starting from the date the quote was raised and going forwards. That's how I found one key day (different for each provider) on/after which the premium doubled, more or less.

(Caution: the effects I describe could all be produced by tweaking a pricing algorithm, but, as anyone reading this thread will know, I'm also a cynic who is predisposed to expect such tactics. I approach all the processes described not expecting insurance companies act in my best interests, financially, nor to set up their marketing rules and systems for my financial benefit. More trusting souls should not follow me down my rabbit hole.)

DullGreyGuy said:

That advice [re. not charging an existing customer more than a new one] came from before the rules changes for Motor and Home that renewing customers cannot be charged more than new business quotes. Most insurers do their renewal quotes in the 28-21 day window as the rules require insurers to provide "sufficient notice" 

In the case I described, I had already received a renewal offer from my existing provider within the advised notice period. The quotes that involved the premium doubling on a particular start date were from two alternative providers discovered via gocompare.

XRS200 said:
Some provider at the bottom end may have an issue accepting NCD [no-claims discount] which is still in use on another policy.

No sign of that yet. The new provider accepted my business and took my money whilst also declaring "there is no need to send us proof of your NCD", strongly suggesting that they had knowledge of my current insurance status. Technically, I suppose I could claim on my about-to-expire policy, in the short overlap period, thus voiding my NCD and calling into question the good faith of my NCD declaration. However, the existing policy includes additional premium for NCD protection so I can, also in good faith, expect no change to my NCD in event of a claim (even if I'm daft enough to court confusion by making a claim on an old policy after a new one has come into force!).