Are insurance companies obeying the rules on renewal prices?

bartelbe

As far as I understand it, car insurance providers are suppose to offer existing customers the same price as new customers. Not convinced that is actually happening.

In my case my renewal quote was £200 higher. When I had no accidents, no claims, no points on my licence and no motoring convictions in the year. In fact the only thing that had changed was 1 more years no claims discount.

Since I wasn't prepared to be ripped off, I got a quote from a comparison site and called my insurer, since the quote was £200 cheaper than my renewal quote.

They went through a whole process of comparing the two policies, claiming the difference must be down to the other policy offering less. Yet when they were compared, they were identical.

In the end I got £180 knocked off my renewal price and this is what makes me suspicious.

Surely that shouldn't be happening if they are offering their best price to existing customers?

It looks like the little old lady who is loyal to her insurer is still being ripped off.

forgotmyname

Assume the company sending you the quote are a broker not the actual insurer and only insurer they use.

So yes they maybe to offer a cheaper quote but switching you to a lower tier insurer.  I use a club scheme and
I know they offer much cheaper prices with companies I would not touch with a barge pole. The type of companies
that trawl through your social media to find any reason not to payout and when they find everything declared they
make something up to not payout until you file a court claim against them, then they payup the day before they are
liable for the costs.

I state that I don't want cover from companies x,y and z when phoning to say I have better quotes this year which
sometimes happens but sometimes my renewal is way cheaper.

comeandgo

We just received our renewal insurance quote for coming vehicle insurance.  We were a new customer last year and this years cost is only £1.99 more and I’m happy with this.  

born_again

bartelbe said:

As far as I understand it, car insurance providers are suppose to offer existing customers the same price as new customers. Not convinced that is actually happening.

In my case my renewal quote was £200 higher. When I had no accidents, no claims, no points on my licence and no motoring convictions in the year. In fact the only thing that had changed was 1 more years no claims discount.

Since I wasn't prepared to be ripped off, I got a quote from a comparison site and called my insurer, since the quote was £200 cheaper than my renewal quote.

They went through a whole process of comparing the two policies, claiming the difference must be down to the other policy offering less. Yet when they were compared, they were identical.

In the end I got £180 knocked off my renewal price and this is what makes me suspicious.

Surely that shouldn't be happening if they are offering their best price to existing customers?

It looks like the little old lady who is loyal to her insurer is still being ripped off.

Insurance is not just about you.
Look at what has happened in the last 12 months that the insurance companies have had to pay out for floods, wind damage, fires in car parks, or little jimmy driving his car while drunk/high & wiping out all their mates in the car  & then add in Inflation
All have to paid for. Ins co do not have a bottomless pit like governments who can simply print new money when needed. So all the payout's are shared around in general insurance costs.

Add in the ins rule is only covering renewal via the same means.
So you apply online. Getting a renewal in the post is not via the same means.

Pricing

The Financial Conduct Authority (FCA) introduced new rules in 2022 that prohibit insurance providers from charging more to renew a policy than they would charge a new customer for the same policy. This rule applies when the policy is purchased through the same sales channel.

bartelbe

Insurance is not just about you. Look at what has happened in the last 12 months that the insurance companies have had to pay out for floods, wind damage, fires in car parks, or little jimmy driving his car while drunk/high & wiping out all their mates in the car & then add in Inflation All have to paid for. Ins co do not have a bottomless pit like governments who can simply print new money when needed. So all the payout's are shared around in general insurance costs.
That argument makes no sense because if it was really about increasing costs for the insurer, they wouldn't have knocked £180 off when I called them. They would have used the excuses you're using to justify their prices and said sorry, can't do any better. The fact they knocked off £180 shows that I was still profitable for them at a much lower price.

Frozen_up_north

My OH has LV car insurance, her renewal a few days ago has gone up by a whopping £10, in fact over a couple of years it has only increased by roughly £20. The renewal cost was £270, that is fully comp on a Seat Ibiza, she is 69 and retired. There is a small discount as a retired union member, not sure how much that amounts to.

400ixl

Simply, yes they are following the law. That states they cannot offer ne customers a cheaper quote than an existing customer via the same channel. The important piece is the channel to market.

You got your renewal through one channel to market ( a direct quote). You then went to another channel which was the comparison sites and got a quote.

You then called a third channel which is the call centre and they agreed to nearly match the comparison site channel. You could have taken the price from any channel and accepted it, if that was the comparison site you would have been better off.

Nothing has changed in that you need to shop around to get the best price, and that includes the different channels to market for your current insurer.

400ixl

bartelbe said:

That argument makes no sense because if it was really about increasing costs for the insurer, they wouldn't have knocked £180 off when I called them. They would have used the excuses you're using to justify their prices and said sorry, can't do any better. The fact they knocked off £180 shows that I was still profitable for them at a much lower price.

Unfortunately, it is a known public fact that insurers are currently paying out more per policy than they are taking in. A fairly decent investment market is helping but not covering it all.

The fact that they have decided they are willing to increase their risk exposure to you does not mean that you personally are profitable. That is a spread risk and they see you as a lower risk than some others that they are willing to try to retain.

It is a very complex business and unless you really understand it all then trying to guess reasons isn't going to pan out. Most of their call centre people only understand 10% of why a price is a price and who they are and aren't willing to lower prices for.

But what you have described complies with the rules on renewal prices.

DullGreyGuy

bartelbe said:

As far as I understand it, car insurance providers are suppose to offer existing customers the same price as new customers. Not convinced that is actually happening.

You're not correct.

For Home and Motor alone they must offer renewing customers a price no greater than a new customer would be offered for the same product via the same channel (ie phone, web, aggregator etc). For the renewing customer the channel used for the last purchase will be persisted. 

So if you got a quote but then phoned up to negotiate it and ultimately bought on the phone then your renewal quote must be no greater than what they'd charge a phone customer this year. If you are going online or to an aggregator to compare prices you arent comparing apples and apples. 

Insurers can also alter their products and have a choice as if to renew existing customers on the old product or the new one. I'm not close enough to consumer insurance these days to know what the FCA guidance was on what constitutes a new product to know if it can be "gamed" or not, certainly the initial commentary was that changes had to be substantial. On the flip side I can certainly say that operating dozens of different products is vastly more expensive than 2-3 given systems must cope with different rules, staff need training on them all, actuaries have to model the potential losses etc. 

Arunmor

born_again said:

bartelbe said:

As far as I understand it, car insurance providers are suppose to offer existing customers the same price as new customers. Not convinced that is actually happening.

In my case my renewal quote was £200 higher. When I had no accidents, no claims, no points on my licence and no motoring convictions in the year. In fact the only thing that had changed was 1 more years no claims discount.

Since I wasn't prepared to be ripped off, I got a quote from a comparison site and called my insurer, since the quote was £200 cheaper than my renewal quote.

They went through a whole process of comparing the two policies, claiming the difference must be down to the other policy offering less. Yet when they were compared, they were identical.

In the end I got £180 knocked off my renewal price and this is what makes me suspicious.

Surely that shouldn't be happening if they are offering their best price to existing customers?

It looks like the little old lady who is loyal to her insurer is still being ripped off.

Insurance is not just about you.
Look at what has happened in the last 12 months that the insurance companies have had to pay out for floods, wind damage, fires in car parks, or little jimmy driving his car while drunk/high & wiping out all their mates in the car  & then add in Inflation
All have to paid for. Ins co do not have a bottomless pit like governments who can simply print new money when needed. So all the payout's are shared around in general insurance costs.

Add in the ins rule is only covering renewal via the same means.
So you apply online. Getting a renewal in the post is not via the same means.

Pricing

The Financial Conduct Authority (FCA) introduced new rules in 2022 that prohibit insurance providers from charging more to renew a policy than they would charge a new customer for the same policy. This rule applies when the policy is purchased through the same sales channel.

Did you take the time to check out insurance company profits?  They are currently doing very nicely as my dividend income shows!