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

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’?