/ Motoring

Are you a loser in the car insurance renewal ‘game’?

Car and pound sign held by woman

We’ve just carried out our biggest ever survey of car insurance renewal quotes. When we looked at what drivers were offered in the final months of 2011 we found that insurers don’t tend to reward customer loyalty.

The results provided evidence that you’ll probably face large price hikes if you renew your car insurance with your current provider, especially if you don’t question the quote.

We looked at how much insurers were proposing to increase premiums. People taking part in our research paid an average of £343 for their previous car insurance policy. And the initial average renewal quote offered by their insurer was £405 – an 18% increase.

Those Which? members who took the time to seek quotes from elsewhere, around 80% of them, were rewarded with an average final premium of just £332. That’s a staggering 18% less than the initial renewal quote and 3% less than they paid the previous year.

And in many cases, drivers didn’t actually need to switch insurers. Simply reporting the lower quotes they’d found elsewhere was enough to persuade their existing insurer to match competitors’ quotes.

No loyalty in this game

The thing that really annoyed most in the survey was that car insurers don’t reward loyalty for people who stay with one particular company for any length of time.

If you shop in Tesco or Sainsbury’s you’ll get money off future purchases as part of their loyalty schemes. If you stick with your car insurer you may face year-on-year premium increases of 40%-50% for no apparent reason. As one disgruntled Which? member pointed out:

‘What is wrong with encouraging loyalty and saving all the extra advertising and switching costs?’

Should we feel sorry for car insurers?

Insurers will maintain that they operate in a loss-making sector and that they’ll subsidise first-year premiums with more realistic pricing once they’ve got you hooked. Is this any justification for ramping up your premium rates in years two and three?

It’s clear that renewing your car insurance will involve a bit of time and effort if you want to get a reasonable premium rate. Is this fair enough as long as everyone understands the rules of the car insurance renewal ‘game’?


I’ve always known insurance companies have different prices for different conditions and do not reward loyalty as such. My insurance company gives me 75% NCD on that years insurance which is guaranteed forever – (however many crashes I have does not affect it) most other NCD vary if you have crashes. My Company has always been fair — A couple of years ago I changed my car and the premium doubled – Got in touch with another who offered a 30% discount but with certain changes – My original company matched that price with a slight change (£250 excess which less than the decrease offered) I accepted that. Subsequently a police car crashed into my parked car at night while I was asleep in bed – the first incident in over 60 years driving – they did not charge me the excess – nor did they raise the premium – I’ll stick with them.

If car insurers lose money – they will increase premiums – They are a business not a charity.

Just like nearly all business operating in the UK their primary aim is to make money, whatever goods/services they offer are just a means to that end. They don’t offer loyalty discounts as its seen as easy money for them. Until companies aren’t run by overpaid greedy so and so’s nothing will ever change, as they’re not smart or focused enough to realise that happy customers recommend businesses they’re happy with, hence no need to bombard people with advertising. Just look at the banking satisfaction league tables, I hardly ever see ads for the one that comes out on top year and after, yet the ones at the bottom several times a day their ads are aired. Enough said.

My insurance company gave an extra discount for being a member of a particular union – so in effect it was a loyalty bonus – The premium quoted to lower than those from other companies for the same circumstances.

Sophie Gilbert says:
8 March 2012

Directline quoted me a renewal price that was about the same as the cheapest I could find on the net, so I stayed with them.

Silly me I thought insurance company’s were in the risk business ha ha
Even though I have been with Hastings direct for four claim free years they had the cheek to tell me my insurance would go up why? because I have retired !!
Well its goodbye Hastings and hello to the Post Office who offered me more at a lower price and they don’t charge for repairing windscreen chips

When I renewed my car insurance with RIAS I said that I would be retiring two months later, and was asked to let them know when I had retired. I did this and was told that there would be an administration charge to amend the paperwork. When I reminded them of the previous notification they kindly agreed to waive the charge. At least they did not change the premium.

Paul says:
20 April 2012

Hi Wavechange
I tried RIAS being already retired and like Saga the costs were so high you would have thought that I was a young driver and not a experienced driver who holds a NVQ 3 in driving and 9 years NCB
The post office gave me a good deal all singing all dancing with no restrictions on my Jeep Grand Cherokee for £320
It pays to shop around every time
What I dont understand is when I get a good price for my wifes car and I try the same company for mine the cost goes up even though we are named drivers on both cars

It’s a minefield, Paul, and Which? is right to remind us to keep shopping around. I chose RIAS because they were so helpful regarding continuing to insure an empty house for over 18 months.

What annoys me more than the need to compare insurance premiums is the importance of keeping an eye on interest rates on savings accounts, where the customer is enticed with an attractive rate and then it goes down to 0.1 or 0.2%. We need a Which? Conversation about this.

It is a good idea to examine the vehicle insurance policy that your insurance provider has given periodically. This will enable you to get the best insurance quote with all possible discounts added thereon. A little bit of online research will provide you with all the necessary details from various car insurance providers and what they have to offer. Attention to a few details will allow you to obtain the cheapest quote available.

I have been sent an automtic renewal statement for travel insurance after going on a website where I had previously had travel insurance. I hadn’t renewed last year and only went back on the site to see what the cost would be in view of my age and medical conditions. I was livid that they would attempt to take £139 from my bank automatically. Luckily I was able to ring and cancel but should never have been sent the renewal in the first place. Dont know if this is legal?
The firm is Staysure

A lot of insurance policies are set up on a ‘Continuing Payment Authority’. It is legal but I think it is sneaky. It is usually indicated in the paperwork at the time of first taking out the insurance but it gets lost among all the other details and then a year later you get a notification to say that the next premium will be deducted from your bank account a short time later. If you enter into an insurance policy on-line it appears to be especially difficult to override and cancel the continuing payment authority for future renewals. If you do it on the telephone, and you are not distracted by other issues, you can instruct the company not to set up a CPA, but they are reluctant and you have to insist, and even threaten to go to a different insurer, before they concede – which they are obliged to do. They also must give you adequate time in advance of renewal to cancel the CPA. In future, insurance companies will be required to give at least three weeks’ notice of renewal and to show the previous year’s premium paid for the same cover as well as the new premium.

A CPA works like a direct debit but there is a crucial difference – it will not show up in the list of direct debits held by your bank any of which you can instruct your bank not to accept [you also have to notify the payee but trapping them at the bank first is a good way to stop unwanted payments]. If you do on-line banking, any CPA’s you have against your account from insurance companies, gym memberships, subscriptions, etc will not be listed [in the ‘manage your payments’ section or similar] so you need to make a separate list of any that you have knowingly entered into and try to think of any that you could have entered into unknowingly and then either cancel them or add them to your list. It is obviously a good idea to diarise the renewal dates of insurance policies with a reminder trigger four weeks previously so you can look out for the renewal notification and even start exploring other quotes.