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Comparison sites add £60 to every car insurance quote

Insurance price comparison premiums

A new study reveals that 88 percent of new and young drivers aren’t aware of the added charges that obtaining insurance from a comparison website incurs. Such websites charge insurance companies a commission for policies sold via their platform.

In total, 61 percent of the 750 drivers surveyed said they believed price comparison websites were the best place to find cheap insurance. Just 11 percent said they contacted insurers independently after getting quotations from a comparison site.

Insurance price comparison premiums

According to Honch, the insurance company behind the research, price comparison sites charge £60 per policy sold via their service. And that cost is passed on to policy buyers.

Unsurprisingly, once informed, 97 percent of those questioned said this was unfair.

Insurance price comparison premiums

“Drivers across the UK are being lulled into a false sense of security by price comparison websites, whose marketing tactics and friendly-faced company mascots can be very disarming,” said Gavin Sewell, CEO of Honcho. “However, these companies know exactly what they’re doing when it comes to squeezing a bit more money out of hard-pressed consumers and cover their tracks well

“We’re relieved that regulatory bodies such as the Financial Conduct Authority are beginning to break their silence on the issues currently plaguing the insurance sector and are looking to put measures in place to restore decorum to the industry.”

Car insurance October 2019

Car insurance prices are down, but Brexit looms

Car insurance October 2019

New data has revealed that car insurance premiums fell during the third quarter of 2019. This, following a slight hike in the second quarter, and the sharp drop of the first quarter.

Overall, the average insurance premium is the cheapest it’s been all year in Q3 (July to September): £459 plays £472 for Q2, and £466 for Q1. Overall the Q3 cost, according to MoneySuperMarket, is five percent cheaper than the same period last year.

Is the cost of insurance coming down?

The figures seem to suggest so. It’s the first time since 2015 that the average insurance cost has been below £480 for three successive quarters. That said, there’s always room for increases. 

Young driver insurance premiums

Indeed, there are indications that prices are about to rise. Third party, fire and theft policies have risen on average by a respective seven and six percent. Brexit uncertainty could be blamed for this, given the currency fluctuations it’s caused and questions around imported replacement parts. The increasing expense to repair modern cars is also increasing claim costs and forcing premiums up.

Are gender and age still factors?

Legally, insurers aren’t allowed to discriminate on cost based on gender. Despite this, the average quote for men and women was vastly different in Q3 2019. Men paid £503 on average, which is down by five percent year-on-year. Women meanwhile, paid £412 on average, which is down four percent year-on-year.

Motorists overpaying on insurance by £1.2billion

Gender specifically hasn’t caused this, however. Riskier cars to insure are generally the preserve of male drivers. Women are also making fewer claims, and therefore have longer no-claims periods on average.

Age remains a kicker, especially for young drivers, though prices for the youngest motorists seem to be coming down. Drivers aged between 17 and 19 have seen premiums drop by four percent over the past year, to £991 for fully comprehensive. For everyone under 30, premiums dropped, while they increased for everyone over 30, in Q3 2019.

Insurance ‘rip off’ as young drivers pay more than double

Young driver insurance premiums

New data reveals the youngest drivers pay up to 149 percent more for car insurance. The average premium, based on 750 survey respondents aged between 17 and 24, is £1,176. This compares with the national average of £471.

The survey was a part of the Young Driver Rip Off Report, supporting the launch of insurance app Honcho. It also revealed that once insurance is paid for, young drivers typically have just £77.99 left to play with every month.

Young driver insurance premiums

Perhaps unsurprisingly, 42 percent of respondents admitted they have considered downgrading to third-party cover to reduce costs. And 37 percent said they had increased their voluntary excess to keep their upfront premium down.

“With so many expenses to juggle the last thing young people need is to be faced with extortionate insurance premiums in order to be on the roads,” said Gavin Sewell, CEO of Honcho.

Motorists overpaying on insurance by £1.2billion

“However, the implications of higher insurance premiums for the younger generation go way beyond the purse strings. Many youngsters rely on being able to drive to get to and from their place of work or to meet with peers to socialise. It’s not right that they should be penalised for their age, but especially at a time when mobility is so key in their development.

“A significant percentage are also being forced to put themselves at greater risk by taking out less comprehensive cover, which could come around to sting them when trying to make a claim.”

Haggling

Want to save money on your car insurance? Get haggling

Calling your car insurance company to haggle can save you hundreds

Haggling: you’re either good at it, or you’re not. But when it comes to car insurance, a little negotiation could go a long way. That’s according to market research agency Consumer Intelligence.

It found that despite the average cost of an insurance premium rising, haggling with your existing provider at renewal time could still result in a lower price.

A staggering one in five motorists who haggle are offered lower premiums by their existing insurer, who will frequently match the best prices quoted elsewhere.

It’s never been easier to search for alternatives to your current insurance provider. Price comparison websites do the majority of the legwork, leaving you to select the most appropriate deal (or arm yourself with alternatives ahead of calling your car insurance company).

It’s particularly galling to see your current provider on a price comparison site offering a lower price exclusively for new customers.

Be prepared to haggle

However, if Consumer Intelligence is to be believed, it pays to contact your insurer to see if they’ll match the prices offered elsewhere. Ian Hughes, chief executive of Consumer Intelligence, said: “Haggling with insurers clearly pays, as drivers who make the effort to negotiate are finding.

“Insurers are generally receptive to renewal premiums being queried and will offer reductions to try and keep customers. It’s always cheaper to keep a customer than find a new one.

“When premiums are rising and other people are haggling successfully there really is no excuse for not haggling or shopping around.”

Data from Consumer Intelligence’s Car Insurance Index shows it’s younger drivers who are paying the highest bills, with under-25s the worst hit. Young drivers can achieve a more affordable price by taking out a telematics-based policy.

The message is clear: learn some haggling tips from Bargain Hunt and you could save money on your car insurance. Release your inner David Dickinson for the real deal.

Car insurance is costing you £200 more than it should

Motorists overpaying on insurance by £1.2billion

The Financial Conduct Authority (FCA) has estimated that each British insurance customer pays £200 more than they need to for cover. Multiply that over six million drivers, and you have a £1.2billion overpayment on insurance for the British people.

The FCA is poised to take action against insurers, saying that “this market is not working well for all consumers.”

“While a large number of people shop around, many loyal customers are not getting a good deal.”

It found that lower-paid or vulnerable customers tended to face higher insurance premiums. They make up one in every three customers who are overpaying. These, along with those who the insurers assessed were less likely to switch. In short, they’re squeezing these customers rather than serving them.

Freezing insurance renewal price increases and more

Motorists overpaying on insurance by £1.2billion

“We have set out a package of potential remedies to ensure these markets are truly competitive and address the problems we have uncovered,” said Christopher Wollard, executive director of strategy and competition at the FCA.

“We expect the industry to work with us as we do so.”

Among those strategies is a freeze on the infamous practice of insurance renewal price rises. At present, customers tend to be penalised rather than rewarded for their loyalty. Opening offers were found to be discounted. Therefore, price rises are almost always automatic when it comes to renewal.

Furthermore, the FCA wants to ensure people feel free to switch insurance by stopping insurers from discouraging a change of provider.

In tandem with the above, the FCA wants more transparency and dialogue between insurers and their customers.

When will we see change?

Motorists overpaying on insurance by £1.2billion

The full report will be published in 2020. While commending the FCA’s highlighting of the issue, Citizens Advice says celebration isn’t warranted until the authority follows through on its proposals.

“It’s great to see the FCA acknowledging that the insurance market isn’t working,” said Gillian Guy, chief executive of Citizens Advice.

“The FCA must now follow through on these bold ideas to stop loyal insurance customers being penalised.”

Car crash

Why motorists should contest if charged by authorities for a road crash

Car crashMotorists hit with surprise bills from authorities for road repairs following an accident should contest them, advises a claims management company – because five-figure sums are there to be saved.

Citing a “shocking lack of transparency”, Kent claims firm CMA says the repairs bills from local councils, Highways England, Transport for London or associated contractors should always be studied carefully because “we frequently see cases of serious overcharging”.

  • More advice from Motoring Research

If you damage Crown property in a road traffic accident, the authorities are fully entitled to charge you: this can be for hitting a motorway barrier or traffic sign, or even damaging the road surface. These bills can go to drivers, fleet operators or directly to insurers.

But because some Highways England contractors are acting in an informal environment, says CMA MD Philip Swift (himself a former police detective), it’s questionable “whether many of the costs being presented are accurate.

“In a not insignificant number of cases, no payment is warranted at all.”

Examples include a fleet operator that was hit with a £46,000 barrier repair bill from Highways England. The claims firm pointed out the length had been incorrectly detailed in yards when it should have been listed in feet: the entire claim was subsequently written off.

Another insurer was presented with an eye-watering £56,000 repair bill for resurfacing a road in the south east: CMA used a Freedom of Information request to uncover a larger such contaminant spill had been rectified in Scotland for just £750.

Even smaller claims can be significantly reduced: CMA cut a £4,700 bill by 85% to £700. Indeed, bills below a £10,000 threshold are often issued by contractors rather than directly by authorities and these are often the most problematic.

“Rather than simply paying it, engage a specialist to scrutinise the invoice,” advises CMA.

Older motorists hit by sharp increase in cost of insurance

older drivers insurance

The cost of car insurance has risen sharply for motorists over the age of 50. While premiums for all went up by 3 percent on average, the over 50s have copped a 3.6 percent increase overall.

Data analytics firm Consumer Intelligence uncovered that the 3.6 percent rise for over 50s made for an average premium of £407. That’s a £15 increase, up from an average of £392.

Younger drivers, as always, are the hardest hit when it comes to insurance. The average cost of a policy came out at £1,673 – a 3.2 percent hike over the past year. While the percentage increase is lower than for older drivers, the percentage represents more money. That hiked price is £52 up in the previous average. The over 25s were hit with a 3 percent hike, with an average price of £699, copping a £21 increase.

Older drivers still benefit from experience, then. In spite of suffering the highest percentage rises, their premiums have increased the least in terms of raw money.

Why is insurance going up?

older drivers insurance

It down to the Ogden rate, which is used to calculate how much insurers pay in compensation when people suffer injuries. The important point to note is that lower rates mean higher compensation, and vice versa. The higher premiums are compensating for a drop in the rate, from 0.75 to 0.25.

Pricing at an overall level will be driven by claims experience and the impact of the Ogden discount rate,” said John Blevins, pricing expert at Consumer Intelligence.

“Many insurers feel misled by the government and had planned for a more favourable discount rate being set. As such, premiums are being adjusted to compensate for the cash injections on to claims reserves made by many insurers.”

How much does a no-claims bonus save you on car insurance?

No-claims bonus savings on car insurance

New research has from a market-leading comparison site has revealed how much money a no-claims bonus can save you on car insurance

MoneySuperMarket’s analysis of 17.8 million car insurance enquiries found that five years’ no claims bonus (also known as no-claims discount) can save you a healthy 24 percent on your premium.

If you were, for example, quoted £800 for a year without any no-claims, five years of no claims could get you down to around £600.

More surprising are the savings for those with less no-claims bonus. Four years’ no-claims still gets you a 23 percent discount, while three years saves you 22 percent.

Two years’ no-claims saves you 19 percent on your car insurance, while a one-year no claims bonus results in a 12 percent discount (that’s still almost £100 off an £800 quote).

No-claims bonus savings on car insurance

“No claims discounts are a great way to save money on your car insurance,” said Rachel Wait, consumer affairs spokesperson at MoneySuperMarket. 

“Insurers are keen to reward those who prove they’re safer drivers, and multiple years without claiming for damage is the best way to demonstrate this. 

“It’s worth noting that when switching your car insurance policy, many insurers also honour no claims discounts accrued during your time with your previous insurer, so finding a better deal won’t necessarily mean starting from scratch.”

She did sound a word of caution, though. “The number of years honoured varies, so it’s important to find out how it might affect you before you switch.”

Car insurance company tells drivers to slow down

An insurance company has been telling drivers to slow down

If you received a communication from your car insurance company telling you to slow down, would you take any notice?

Insurethebox says it has been in touch with 80,000 motorists over the past two years in an attempt to prevent bad behaviour. It says it can identify which customers are the most likely to have an accident.

It’s a little like receiving a tap on the shoulder from your headmaster. Or being told off by your dad.

But here’s the thing. Insurethebox reckons it has prevented around 700 road traffic accidents and 22 serious injuries over the past three years. That’s quite a claim.

This follows the news that researchers at a Canadian university concluded that speeding is a strong predictor of crashes.

“We know that speed is the single biggest influence on accident risk, but despite this, drivers are continuing to speed”, said Simon Rewell, road safety manager at Insurethebox.

“The latest government speed compliance statistics show that, in 2018, under free-flowing traffic conditions, 46 percent of cars exceeded the speed limit on motorways, 52 percent on 30mph roads and 10 percent on 60mph roads.

“We believe young, inexperienced drivers are particularly vulnerable to the risks.”

Insurance company contacts drivers

The company used five billion miles of driving data and associated claims to identify how, where and when speed has a critical influence on the frequency and severity of accidents.

Customers were targeted via tailored communications, highlighting the risks they pose to themselves and other road users.

It’s good to talk

“Encouragingly, 70 percent of customers say our programme has made them drive more safely,” continued Simon Rewell.

“Our initiative demonstrates in the most tangible way possible the huge beneficial social impact proactive risk management has, not just for inexperienced drivers but the population at large, averting or reducing the impact of life changing events.

“We also believe the results demonstrate that if all insurers communicated with policy holders in a similar way to us, 1,000 serious injuries could be avoided and 80 lives saved each year in the UK alone.”

Would a letter or email from your car insurance company encourage you to change your driving behaviour? Let us know in the comments below.

Honcho ‘matchmaker’ app promises cheaper insurance for young drivers

Honcho car insurance app launches in UK

A new app is targeting young drivers with a promise of cheaper car insurance.

Honcho is a reverse-auction marketplace which acts like a ‘matchmaker’ between customers and insurance companies or brokers. It’s available for motorists of all ages, but the company says young drivers will see the greatest benefits.

Unlike price comparison websites, Honcho charges insurance companies and brokers a £1 fee to compete for consumers’ custom. The insurers get three rounds of bidding to offer the best price, with the companies able to view rival bids. Young drivers should see a reduction in the £1,177 a young driver typically pays for insurance.

The company says insurers are charged up to £60 per policy on a price comparison website and this fee is passed on to the consumer. The £1 fee should mean that the insurance companies can reduce their own prices, it says.

It can’t guarantee the lowest price for a particular policy, so consumers may be able to find it cheaper elsewhere.

‘Revolutionary for drivers of all ages’

Young person using Honcho app

Gavin Sewell, CEO of Honcho, said: “Honcho is one-of-a-kind and will be revolutionary for drivers of all ages.  However, we’re especially keen to see the benefits to young motorists who, for so long, have struggled to acquire fairly priced policies – with many paying 149 percent more than the average driver.

“We see Honcho taking on the role of ‘matchmaker’ between customers and insurers or brokers, initially for car insurance, but with a view to offer the service across a range of other insurance products and markets later this year.

“We’re also very much championing consumers’ interests with absolute clarity and transparency in all that we do. It’s going to be the way forward and price comparison websites are going to feel us hot on their heels.”

Car insurance policy

To use Honcho, consumers download the app from the Apple App Store or Google Play Store and then scan their driving licence. Insurers bid against each other to offer the price, with consumers able to use a so-called ‘Honchometer’ to see how closely each bid matches their requirements.

In common with a price comparison website, the consumer is free to choose the insurance provider of their choice.

Companies signed up to the platform include Brightside, Flux Direct, Quoteline Direct, Freedom Brokers, Marmalade and Think Insurance. Underwriters include Aviva, Axa, LV, Ageas and Zurich.

Andy Martin, broker and distribution director at Marmalade, said: “This new app has the potential to really shake up the way insurance is delivered and we’re especially excited to be reaching out to more young drivers to help them drive down the cost of insurance with the help of our black box technology.”

Click here to find out how to get cheaper car insurance.