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Households are hit by large insurance price increases of 30 percent or more as their home and car policies are renewed, putting further strain on overstretched budgets.
Cases seen by Money Mail include a car customer experiencing a 53 percent increase and a residential customer quoting 76 percent more than last year, even though neither has filed a claim or his vehicle or ownership changed.
And we can reveal that insurers are so determined to push through inflation-destroying increases this year that they are anticipating customer backlash by sending out messages emphasizing that there is no point in negotiating.
Coverage of costs: Households hit by large insurance price increases of 30% or more as their home and car policies are renewed
In a text message to a car insurance customer experiencing a huge increase, it said, “The price we offered you is our best price based on your current data. 2
“We cannot offer discounts or match any other quotes you may receive. To avoid calling us, you can manage your renewal in [online link].’
When customers call to try to negotiate, they say insurers have refused to budge.
The eye-watering price increases – in many cases adding hundreds of pounds to household bills – are being forced on customers, even if they have a long history of making no claims and have remained loyal to one insurer for years.
And the extra premiums are demanded despite measures put in place by the financial regulator to prevent loyal customers from being defrauded by for-profit insurers.
For years, loyal policyholders have fallen victim to a practice known as ‘price walking’ – a form of price discrimination in which regular customers are charged higher prices for their coverage than those purchasing an identical policy from the same insurer for the first time.
While the new rules – introduced last year by the Financial Conduct Authority – mean that no existing customer should be charged more for cover than they would pay as a new policyholder, the FCA has done nothing to halt rising premiums. call.
Many loyal customers who are told their new policy price is non-negotiable will simply pay.
The elderly, in particular, have a hard time looking for cheaper coverage – and they are loyal to their insurer out of habit. Some of those who shopped this year say they’ve been thwarted by rival companies’ prohibitive cover costs.
Even customers who have successfully negotiated a discount with their existing insurer are still facing double-digit premium increases.
Readers who have contacted us in recent days to complain about rising coverage costs believe that the insurance market regulator’s intervention has done nothing to provide them with a fairer deal.
Increases: Even customers who have successfully negotiated a discount with their existing insurer are still facing double-digit premium increases
When the FCA announced its reforms last year, it claimed they would save loyal insurance customers more than £4bn in premiums over the next decade. This boast is now widely ridiculed by policyholders.
“Garbage,” says Alan Wheatley, who has just been told his annual home coverage at Barclays will increase in price by 15 percent. to £352.65 when due for renewal later this month.
“I’m not saving anything from the regulator’s reforms. I’m being asked to pay more to cover my four bedroom home – and when I try to persuade Barclays to defend the higher premium, the answer is ‘take it or leave it.’
Alan, a retired advertising executive from Halesowen in the West Midlands, has been a Barclays bank client for over 50 years and has never made a claim with his insurance.
Data collected by Compare the Market and financial advisor Consumer Intelligence confirms the high level of inflation in the insurance market, particularly in auto insurance.
Compare the Market says average auto insurance premiums are currently rising 14 percent year over year, with older drivers (over 50s) facing the largest percentage rate increases.
Consumer Intelligence believes premium inflation is even higher, at 17.4 percent.
Home coverage data is more ambiguous, with the Association of British Insurers indicating that households paid an average of 7 percent less in the second quarter of last year than a year earlier.
Yet the experience of Money Mail readers points to a wide variance around these averages.
For example, Andy Green, from Buckhurst Hill in Essex, was told late last year that his home cover with LV would rise in price to £463.84, a premium increase of 76 per cent.
The price hikes are being forced on customers even if they have a long history of not filing any claims and have remained loyal to one insurer for years
Andy, a 78-year-old retired womenswear sales manager, couldn’t believe the renewal announcement and complained — only to be told that the increase reflected “claims,” ”convictions,” “the property,” and “the area you live in.” .
He says, ‘I’ve never filed a claim, never been convicted of anything, my house is a lovely detached bungalow and Buckhurst Hill is as lovely as you’d want to live in.’ How do I earn a premium increase of 76 percent?’
Andy complained again, this time getting a lower quote of £401.79, followed by a further £50 ‘compensation discount’. It still means he now pays 34 percent more than last year, even though the cost of his car coverage with LV has dropped.
Other LV customers dissatisfied with premium increases have had short shrift.
Until last month, Ray and Celia Palmer had been loyal LV customers for over 20 years and never claimed their home coverage.
But when the company refused to budge on the 39 percent premium increase it wanted to impose on them, they said enough is enough.
They have now taken out cover with rival insurer Aviva for a lower price than last year.
“I’m a loyal person,” says 82-year-old Ray, who lives in Hove, East Sussex, and is a retired head of staff for a financial firm.
“I always thought LV was playing fair with me, but when I called to discuss the increase I was told it was non-negotiable: no better terms were available. Period, end of case.
What a sad end to what used to be a mutually beneficial arrangement.”
LV told Money Mail: “It’s tough for consumers right now and we’re doing what we can to keep costs down.
“Due to the cold snap in December, we handled double the number of home and car claims.
Last June and July, subsidence claims were up more than 200 percent, while fire-related claims are up 40 percent from 2021.
“All this has a huge impact on costs – and as these events are more likely to occur in the future, we need to take this into account when calculating premiums.”
The Financial Conduct Authority emphasizes that its reforms have ‘made the insurance market fairer as loyal customers are no longer penalized for staying with their provider’. But it nevertheless encourages customers to shop around to find the best deal.
James Daley, of campaign group Fairer Finance, says the regulator’s ban on dual pricing forces insurers to target specific segments of the market – for example, motorists in their 50s but not those in their 60s.
He adds: ‘Since they have to offer the same prices to new and existing customers, once you move out of their target risk segment as a policyholder, they will start paying higher prices not to keep you.
Unfortunately, there are always unintended consequences of price interventions. However, the good news is that if your premium has gone up, you should be able to get a better deal by shopping around.”
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