/ Money

Fed up with the insurance auto renewal merry-go-round?

A carousel on a beach front

We’ve recently heard that the Financial Conduct Authority is going to launch an investigation into car and home insurance companies, to make sure they’re treating their customers fairly at renewal time.

The Financial Conduct Authority (FCA) is going to look at the way that insurance companies regularly offer their existing customers higher premiums at renewal time than the premiums offered to new customers.

There’s a fear that certain groups of people, for example those who don’t have the time or ability to shop around online, are being penalised for simply accepting their renewal quotation.

When we carried out our own research on insurance renewals last year, you told us you were tired of playing the renewal ‘game’. I’m sure most of you would prefer to be rewarded for your loyalty with lower premiums.

However, many loyal customers told us that their insurers offered new customers rates that were several hundred pounds cheaper than their renewal quotes. And others told us that when they shopped around and found cheaper quotes, their insurers would often match that price.

But should you have to work so hard to get your prices down if your insurer can clearly insure you for less?

Playing the renewals game

On top of the problem of expensive renewal quotes, there’s also the issue of insurance policies that automatically renew. Insurers will often renew your policy automatically, usually at a higher premium rate, if you don’t inform your insurer that you want to cancel it by a certain date.

Insurance companies will write to you or call you in advance of the renewal date to let you know what your new premium will be, and ask if you’re happy to renew. But how easy is it for people to miss this letter in the post, or forget to cancel in time? To make matters more difficult, insurance companies won’t usually tell you the previous year’s rate – making it difficult for you to compare the new price with the old one.

Still, insurers maintain that auto-renewals are helpful for time-pressed policyholders who may not have the opportunity to re-arrange their cover.

So how do you find your way around the insurance renewal maze? And what’s your opinion of automatic renewals? Is it a sneaky trick, or a useful time saver?


They would be useful time savers if the renewal quote was competitive compared to a quote for a new customer, but as they’re not, then they currently serve no useful purpose as you have to switch to a new company to get the better deals with cashback as well.

Here’s hoping the FCA actually achieve something, and hopefully by October when I need to renew.

I may be in a minority of one here, but I am sceptical about statements such as “you told us you were tired of playing the renewal ‘game’.” as if that was everybody. I wonder how scientific the questions and survey were – I don’t know. However, I also query the culture expressed that some “don’t have the time or ability to shop around online”. If you are concerned about minimising your insurance cost, you should be prepared to put a bit of effort into achieving it. Even an acceptable renewal quote might be bettered by another company – things change.
I have two motor policies that I arrange directly. I look at the renewal cost and decide whether to shop around the Which? best buys. It’s always been easy and successful, and I have not had to change provider much. Another is dealt with through a broker, who advises if the current policy still meets my requirements; this year he proposed a new insurer and saved me around 20%.

It only needs to be done once a year, you can do it on-line, by phone, or through a broker.

You expect to shop around for food, fuel, clothes, white goods – why is insurance so different and seemingly too much effort?

Well, I’m tired of playing the renewal game, and I know others who are. Perhaps Which? is right here.

Let us spare a thought for the elderly, people coping with illness, or family problems. Why should greedy companies be allowed to exploit them.

I agree wholeheartedly, having spent all afternoon arranging insurance and losing £55 because I immediately changed my mind about the policy I had and which is not yet in effect until 7 November. Heaven help the elderly.

Shopping around is one thing and of course if you want a competitive price you need to check out the options.
But finding, as I did, that a significant saving can be made by not renewing a policy but just taking out a new identical policy with the same company is madness .

This is good news, and long overdue. Commonsense suggests that companies should offer better prices to loyal customers, especially those that have no claims. Putting up prices beyond what a new customer would pay is pure greed, so thank goodness the Financial Conduct Authority is taking action.

Aside from the issue that shopping around can be very difficult for some people, I can’t help but feel that insurance companies are treating their customers with a little contempt.

It just doesn’t seem right to me that companies ‘reward’ loyal customers with inflated prices to potentially subsidise the cost of attracting new customers.

Switching insurance companies also costs the companies money, and it is customers who foot the bill – whether they switch or not.

I think it is a little naive to expect companies that exist primarily for the benefit of their shareholders to act in altruistic ways toward their customers, unless they see it as a way to improve profits. And, of course, if it did improve profits they would, but loyalty per se as a factor does not seem to be in the frame.
I am, as well as others, also a little irritated by these practises – particularly when the AA each year reduces my renewal membership fee, on request, by around 40%! However it requires just a bit of effort to resolve – a phone call. I would still check what the RAC or Green Flag etc were offering to see if I was getting the best deal, so that effort still required.
Where do you draw the line? New customers at BT, Sky, for example, can get 6 months rental or subscription for half price. Wht not all customers? Because they want to attract extra custom. Do you ban that? How many introductory offers do you see where you get it free for a month – but leave your credit card details so that, when you forget to cancel you are then tied in to a contract? Cynical perhaps, but presumably effective at generating business.
Nationwide originally gave me a £25 voucher if I took out their car insurance. As it happens it proved competitive so I did – existing customers did not get £25 off.
Legislate and these companies will find other ways – I have never thought marketting a totally honourable profession but that is their job.
Whilst I sympathise with the view that some people have more difficulty in dealing with this than others, look at the reverse of this. A much larger number of people have now the means to search for the best deals than was ever possible before the internet.

OK, maybe I am a bit naive, Malcolm, but it is time that corporate social responsibility was extended to curb what companies get up to to make profits at the expense of the public. Many of the discussions on Which? Conversation focus on issues related to corporate greed.

You are right in suspecting that you are in the minority. 🙂

I think “corporate social responsibility” is a secondary issue for companies in the real world – they exist to make lawful profits in a competitive environment. It’s the way the capitalist world is – I am neither condoning nor condeming it, just putting foward my view as to how business works. You are not likely to change it. Many business make modest profits – competition sees to that, so “corporate greed” is not normally an appropriate description (paying excessive salaries, bonuses and severance payments without proper scrutiny I think is greed, but we seem to allow it to happen in public as well as private sectors).
I’m not so sure about being in the minority if I hold a view on the way the business world functions – that was my point, not necessarily that I believed there were better. Please don’t confuse the two issues 🙂

Well, I am glad we have Which? helping to keep companies in order.

Do you think the Financial Conduct Authority was right to get involved, as I do, or are they interfering with good competitive business practice?

Malcolm R – I think you are missing the point. Sure, we can all shop around to find the best deals and so we should.

However, insurance companies are regulated by the Financial Conduct Authority (ex-“FSA”) and, since they deal with money and not consumer durables or services, they must operate to higher standards than a high street retailer or utility provider. If the company and their shareholders do not like the idea of operating in a regulated environment and playing by those rules, they need to look for profit-making opportunities elsewhere.

The FSA has long promoted the idea that customers of financial services products (which includes insurance) must be treated fairly – or “TCF” in the jargon. One of the outcomes of TCF is that:

“Consumers are provided with clear information and are kept appropriately informed before, during and after the point of sale.”

Where an existing customer is charged more for an insurance product than they were the previous year, the increase has not been explained, and other customers are paying less for identical or similar cover, then the customer has not been “provided with clear information” or been kept “appropriately informed” of their options at renewal.

So, you are right that the consumer has responsibility to shop around for a better deal, but a WORSE deal cannot be offered to the customer without breaching the FCA guidelines that are there to regulate the market and protect the consumer from unethical practices.

If we all take the trouble to make a complaint when we spot this type of behavour, it would soon stop. You only need to express your dissatisfaction over the phone and the insurance company are obliged to log and formally deal with it.

em, I see two separate issues. One is dealing with the situation as you find it – you are not happy with your quote so the immediate action that benefits you is to find another provider – hopefully one you will find better to deal with in the future and offering cover at a better price. The second is to try to change the situation if you think it is operating outside the guidelines or the law – that takes longer. I’d be interested to know where the FSA made a rule on the cost to new and existing customers.

“Discover Which? for £1.00

Sign up for a 1 month trial and you will receive:……..”

Are all members, as a reward for their loyalty, having their annual subscriptions reduced accordingly to get one month for £1 (£8.25 off mine please!). Or is this a ploy to attract, and keep, new members who give you their credit card details and don’t cancel?

Tongue in cheek.

The renewal farce is bad enough but how about this one:
I’m in the throes of buying a new house. There is a small tributary about 180 meters away so I own up to the insurer. That’ll be another £50 per year please. But wait, says I, the Environment Agency flood maps show that the anticipated maximum flood is about 170 metres away and there has been no flood since 1947 when the records started. That doesn’t affect it says Mr insurer. Crazy, says I, the house is, actually, 15 metres (49′) above the river/stream level – oh, insurers only look at the plan distances, they don’t take vertical differences into account! I was speechless – so we’re into pushing water up hill now?
Perhaps Which should be looking at this kind of utter stupidity (presumably borne out of the tick sheet mentality – has nobody got any common sense anymore?).

Potpot says:
19 July 2013

I’ve just been caught out by quote me happy who auto renewed my car insurance. They claim they sent me an email that I have not got. Therefore, unaware of this I renewed elsewhere. Today I got my credit card bill showing both insurance costs so I contacted quote me happy asking for a full refund. They stated that I was advised on my POLICY SCHEDULE last year that they would do auto renewal. Furthermore as the payment was taken against my credit card more than 14 days ago the cooling off period has expired so they will charge me a £53 cancellation charge. advised them that I did not recieve their emails and did not opt in to auto renewal and would not have been made aware of this practice until after I bought the policy last year. Therefore I considered this as unfair practice. At this moment they are not budging. Any advice?

Take them to the Small Claim Court.

Anon the mouse says:
20 July 2013

The auto-renewal nightmare is only part of the problem. Mine magically halved when I rang to cancel it, they prey on those that don’t check or don’t have time.

Claiming on a policy makes the auto-renewal look postively nice in comparison.
14 days to respond letters sent out second class, meaning you might get 7 if you’re lucky.
Repeating the same thing over and over and over and over and over again….could you just repeat the details one more time please?
Specialist reports required, but they don’t have specialists or a list of where to go. Also this is at your own expense and they refuse to reimbursed for doing their work for them.
Documents sent completed and ready to sign, actually blank and need filling in again.
2 weeks to even start to look at a claim. Which will only reduce to 1 week when you ask for the official complaints dept details.
Everything done via post, print, sign, scan and email not supported, making everything takes weeks longer.
All calls are 0845 or 0870 and frequently take over half an hour.
Compaints take upto 9 weeks to resolve, but claims will be closed in 2 weeks. No extensions to claim timescales allowed,
In short you pay money to then do their work for them and be treated as though you should be locked up for daring to use something you actually pay for.
Unwritten terms and conditions that you are only notified of when you make a claim.
Written terms and conditions are for them to punish you and refuse to pay a claim.
Pointing out that they are breaching their own terms and conditions is not relevant, only you breaching them is.
On the plus side the official complaints dept seem to have half an idea and answer quickly.

Bruel says:
2 June 2014

I asked the RAC for a renewal quote approximately 4 weeks before expiry. They could not give me one on the grounds that my request was being made too soon. I subsequently took out insurance with another company and to start on the expiry date of the RAC quote.

The RAC had not made it clear to me that their policy was subject to auto renewal. Had I known this I would have requested it not to apply or I would have considered another company. When I did receive the RAC quote (which to be fare was competitive) I had already made an agreement with another company. After reading the headline figure I binned the RAC quote without further consideration –end of story, or so I thought. I did not consider ringing the RAC to say that I had changed insurance company and because my bank details had changed I was also confident that the matter was now closed.
One day (24 hours) before the renewal date I received an email from RAC thanking me for auto-renewing! I do not check my e-mails daily and so actually read this a few days later when I received a letter from the RAC thanking me for renewing. I was not concerned about this and thought that everything would come to a close when the bank request was turned down.
In fact the RAC are now accusing me of a breach of the terms and conditions, they are asking for an administrative fee of around £25 and a policy fee of around £90. I have refused to pay but they are now pursuing me for this through their debt recovery office. I do not know what the outcome of this will be. Neither do I know where I actually stand (any advice comments appreciated).
Auto-renewal does have its benefits. However I have always wanted to shop around myself. This helps to keep my cost down and I like to think that it goes towards keeping insurance premiums competitive generally. Auto-renewal is definitely out for me and companies should make it completely clear with the option to opt-in for the service rather than make an automatic assumption. This was certainly not the case with my RAC experience. In future I will explicitly request that my card details should not be used again without my permission and that I refuse to accept auto-renewal. In my particular case the RAC is making a more sinister attempt to rip me, and presumably other people off.

I am having the same problem with them too but I sent them emails to cancel the automatic renewal. I had also changed banks so they could not take the money and I am also receiving intimidating letters, emails and calls from them demanding fees what is the answer?

I am with the AA and receive a notification a few weeks before renewal day with the new “premium”. If I do nothing it will automatically renew. However, as the premium is excessive this gives me plenty of time to look at the rest of the market, check what the AA charge new customers for my cover and then make a phone call to negotiate a premium I am happy with. OK, it’s a bit of a game, isn’t it? But the AA do not have to accept me as a customer, and I don’t have to use them. I have had to use their services in the past on my elderly cars and have been satisfied.

John says:
5 August 2013

I have been looking at quotes to renew my household insurance and find some companies are being a bit sneaky in that there is a compulsory excess which is not shown along side the voluntary excess so that you might find when making a claim that the excess is double what you though you had arranged

It is not just Motor and Home insurance. I found an auto-renewal clause in a new Dental plan from my Dentist. If I cancel the DD and they continue to charge, I will challenge them in Court.

Just had a renewal quote from a well known British Gas supplier for home cover, for being loyal I can pay £252. Yet if I was a fickle switcher and was new I can pay £216 and get £40 cashback. Thats approx a 30% discount for being new.

Total rip off for an existing customer.

Well done William. May I recommend that you ring back and explain why you are leaving. I do with insurance companies. Some say that they may be able to match quotes and I tell them that they should have thought about this before they had lost a customer. 🙂

I am normally much more polite on the phone, but prepared to make exceptions.

Hi Wavechange, Already tried, they only managed to knock it down to around the £216 and wouldn’t go any further. 🙁

So I’ll wait the 6 months and then re-apply as a new customer.

I’ve also been cheeky and tweeted @theFCA about it, and suggested the simplest fix is to ban the time limit you’re forced to wait to apply as a new customer. Sorry new customers

That’s a pity. At least they know why you are not renewing.

I have always wondered about the rules on being a new customer. The only time I have done this was when I rejoined the RAC as a ‘new customer’, after a gap of about nine years.

It seems its something that each company can decide on themselves. British Gas used to be 6 month, yet a couple of car insurance companies I bounce between are 12 months each.

Thanks for that. I had assumed that it was a good strategy to declare that I had been a previous customer and that I had not had a claim then or since. That has not worked for me, so I will be a ‘new’ customer in future unless asked.

Pete says:
23 August 2013

I renewed my insurance with LV this year. I have been with them and there associated company Frizzell for years. I did not shop around as I have had two accidents in the last five years: only minor ones not damaging my car. I thought it was a waste of time looking elsewhere in these circumstances: This years renewal was £360, with protected no-claims discount 75%

After renewing I went into LV’s website and put in all of my details and declared the accidents and to my amazement I got a quote of £219 with the protected no-claims discount continuing on as before.There are just two parallel paths in car insurance companies. One is for the purpose of ripping-off loyal customers and the other for new customers.

I did the same with my house insurance last year and got a reduction of £300. I asked the company why and they just said my original policy was an “old” policy.

As I don’t think the FCA will either a) go far enough or b) quick enough, I’m currently thinking about starting another epetition ( even though I won’t get enough votes ) …

But at the moment I can see this doing more harm than good as companies fight for other ways to “skin us alive” ,as any argument I try to raise for treating customers fairly ( e.g. allowing everyone the same “new customer” deals) is likely to move companies even further away from rewarding loyal customers with discounts.

Here’s what I have so far ( comments welcomed ) And FYI I’m still not 100% happy with the wording …

“Many companies prevent existing “loyal” customers from taking advantage of their best deals by only allowing new customers access to them by adding an arbitrary time frame for being treated as a new customer, whilst very rarely rewarding existing customers for their loyalty. Restrictions such as this should be made illegal.”

Checking my renewals for car insurance – one with the Co-operative renewed 6% lower than last year, another with Nationwide 10% lower, both without any negotiation. Which? recommended providers. Choose who you deal with carefully and it’s likely you’ll be treated well. Vote with your feet (or wheels) and maybe the not-so-good will take notice?

I would have thought car insurance should be cheaper for the majority as a result of the European directive that come into force last November/December ?

Although according to a report in the telegraph from the AA, its likely to be about better fraud detection and making it harder to get whiplash claims agreed …


And I wonder if the Co-op reduction of 6% compared to others has anything to do with them making a huge loss this year and probably needing a bailout.

After my experience with my car insurance today, I am convinced that there need to be some legal controls on insurance auto-renewal.

I received an email from Aviva titled “Your insurance is due for renewal” and had a big yellow button labelled “My Policy”. This took me to the Aviva customers’ online page. As soon as I logged in, I got a message saying “Thank you for renewing your policy for another year. Your new policy expiry date is 20 October 2014.” If I want to cancel it, I have to ring an 0845 number (unless of course I use SayNoTo0870.) I think insurance companies should not be allowed to get away with such dubious tactics.

Michelle says:
5 February 2014

Something needs to be done about the way these companies conduct business. This is my very recent experience.
I pay for my home insurance (Buildings & Contents) monthly by direct debit. I received my renewal notice and quote about 3 weeks ago. I was previously paying £18.50 a month, I have made no claims, I have not missed or been late with any payments but Direct Dial increased the Monthly amount to £27.30. They also stated that if I did not contact them they would take this as acceptance of the quote. I contacted them to let them know I would not be taking out insurance with them. I was not surprised when they managed to discount it to within a few pence of what I paid last year. I told them that I still would not be renewing with them as they tried to rip me off and they should have offered me the best price to start with. They then told me that the price they quoted in their letter was the price they got from Legal and General and they had not applied their own discount at that point. “what rubbish, the quote was on Direct Dials letter headed paper”.
I then went on to a price comparison site and the quote I was about to accept was also with Legal and General. When filling in the details I stipulated that I required, accidental cover, the excess I was prepared to pay and to pay Monthly by D.D. Quote was fine and so I clicked to go through to their own site and check the details before purchasing. All was fine until the last question, “how did you pay for last years insurance” this was marked as annually and so I changed it to Monthly. This then increased my payment by a further 96p a month. I know it is not much but it is the principal and the fact they are sneaking that in after you leave the comparison site. If I changed it to “no previous Insurance” it went back down in price. I phoned Legal and General and they couldn’t justify it and would not remove it. Also, their standard accidental cover is next to worthless as it covers very few accidents and only certain items. If you want the normal level of accidental cover, they another £3 a month. Hence I will be looking else where.

Mike Haville says:
20 August 2014

It is fun every year with the AA, this year had a renewal quote of £174 (up from £129), went on confused.com and got AA quote of £154 with breakdown (but a high comp. excess). Got on phone complained and got excess lowered, still with breakdown for £160. This brings my insurance down to about £120 as breakdown is about £40.
It is a bit of a pain, but I try to check market on energy, insurance and savings every time a contract finishes, the problem is when I am abroad / busy and the change gets under the wire and then you do feel very hard done by.

David Burtenshaw says:
8 September 2014

I am very perplexed and annoyed with Privilege Insurance Company. I am a very busy man and never check my automatic renewals for my home insurances until just recently when a friend told me how much he was paying for Household Insurance. When i checked i was horrified at the premium. For buildings insurance alone i was paying £1600. This figure back in 2005 was £490, but ever since they have renewed automatically and i have never checked. I went on to a comparison site and found exactly the same policy for buildings but also including contents for £450. Surely these companies must have a “duty of care” to their customers to provide us with renewals that are at least within the current market prices and not £1000 more expensive than they offer on line. This is daylight robbery and i have been paying these outrageous premium since 2007. I really want this investigated and would love to know how many other people are in the same boat.I bought this up with the Insurance Company and they offered to re-imburse my monthly premiums i had paid for this years policy so far ( 2 monthly installments of the full £1600 annual premium ) then put me through to their sales team to put me on a new policy at the £450 rate including contents cover . They then said there was nothing they can do about previous years overcharging of premiums and when i asked why they replied “we just can’t “. That is like being told told the longer we rip you off the more we make out of you until you catch us, and when we are questioned we will just offer a small recompense to keep the customer quiet, never mind the previous 7years of hyper inflated out of the true market price premiums they have been charging. To be honest i’m extremely insulted by this and where is their duty of care to their customers, the whole process stinks.