We’d like to remind Forumites to please avoid political debate on the Forum.
This is to keep it a safe and useful space for MoneySaving discussions. Threads that are – or become – political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!
The Forum now has a brand new text editor, adding a bunch of handy features to use when creating posts. Read more in our how-to guide
'Unfair' Renewal Pricing
paddyandstumpy
Posts: 1,486 Forumite
Interesting case study published in this month's FOS newsletter, an elderly gent had blindly renewed his home insurance via the same insurer for 15 years. Increases after year 5 averaged 15% per year, the FOS ruling is below:
"We told the insurer to refund the difference in premiums, with interest, for each year between the price paid after five years and the subsequent renewal offers. The insurer also accepted our recommendation to pay £150 for the upset they caused Mr A."
(taken from FOS case study 144/3)
I've never agreed with dual pricing, however it's a necessary evil where rates are sold at a loss to get the business in.
Having seen some really unfair commission pricing from one Broker who targeted older clients, I'm glad that the FOS are now taking a stance on this, considering cases on their merits and forcing refunds where appropriate.
Hopefully the link provided can assist with other complaints seen here from time to time, where renewal pricing for long term clients is well above NB rates and unjustifiably so.
"We told the insurer to refund the difference in premiums, with interest, for each year between the price paid after five years and the subsequent renewal offers. The insurer also accepted our recommendation to pay £150 for the upset they caused Mr A."
(taken from FOS case study 144/3)
I've never agreed with dual pricing, however it's a necessary evil where rates are sold at a loss to get the business in.
Having seen some really unfair commission pricing from one Broker who targeted older clients, I'm glad that the FOS are now taking a stance on this, considering cases on their merits and forcing refunds where appropriate.
Hopefully the link provided can assist with other complaints seen here from time to time, where renewal pricing for long term clients is well above NB rates and unjustifiably so.
0
Comments
-
Your link does not work.
It is an interesting case which I agree and disagree with.
I don't agree that they should have refunded all of the increases purely because anyone with an understanding of property insurance knows that the cost of rebuilding a property increases fairly substantially each year. Ideally they should have refunded the increase in premium after taking into account the annually published inflation rate in rebuilding costs. These often run at between 4% and 10% so the increase compounded over five years is fairly substantial.
However I understand why the FOS have adopted this stance.
It's worth also reading 143/4
Incidently 143/5 Also touches on the same subject 144/4 which is a similar complaint but was not upheld because the Insurer made it clear in the renewal documents that they also offered other products that may be cheaper.
One of the factors that went against the Insurer in 143/3 is that the Insurer mentioned they had cheaper products but that these would not be cheaper unless the customers circumstances had changed.
http://www.financial-ombudsman.org.uk/publications/ombudsman-news/144/144-insurance-pricing.html0
This discussion has been closed.
Confirm your email address to Create Threads and Reply
Categories
- All Categories
- 353.5K Banking & Borrowing
- 254.2K Reduce Debt & Boost Income
- 455.1K Spending & Discounts
- 246.6K Work, Benefits & Business
- 603K Mortgages, Homes & Bills
- 178.1K Life & Family
- 260.6K Travel & Transport
- 1.5M Hobbies & Leisure
- 16K Discuss & Feedback
- 37.7K Read-Only Boards