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?
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