Half of drivers think making loyal insurance customers pay more should be illegal. That’s according to new research commissioned by GoCompare.
It’s common knowledge that renewal prices can be jacked up, given that many motorists see changing insurers as a hassle. As many as 62 percent of motorists allow their car insurance to automatically renew, even though switching could save them up to £247.
The Financial Conduct Authority has been watching the insurance market for some time. It’s taken steps to force insurers to improve information on their renewals, to help consumers in making decisions.
Renewal letters are mandatory, including the numbers previously paid by comparison with the proposed renewal figure. This letter must also encourage customers to make sure the cover is right for them, and remind them they can compare prices elsewhere.
Targeted price caps for particular insurance vendors are an option that could be explored by the Competition Markets Authority, but the outlawing of heightened renewal premiums looks unlikely.
Shop around – it’s easier than you’d think
Switching insurers isn’t that difficult, and you don’t even have to switch to get a good deal. Get a good quote from someone else, then call up your current insurer and threaten to leave. Chances are, the numbers will tumble.
The reason it’s difficult to legislate against premiums is because, ultimately, it’s the consumer’s prerogative to find the best deal. Overly extortionate prices can be capped, but we owe it to ourselves to shop around.
“At renewal, car insurers offer to make life easy by continuing their customers’ cover without them needing to take any action,” said Lee Griffin, a founder of GoCompare. “While this helps ensure drivers don’t inadvertently allow their cover to expire, the convenience of auto-renewing usually comes with a hefty price tag.
“In lieu of legislation to close the gap between renewal and new business pricing, it’s imperative that people keep shopping around and switching to avoid getting ripped off.”