Direct Line may be the tip of an iceberg of overcharging insurers, says JEFF PRESTRIDGE
The announcement through Direct Line has announced it will offer £30 million in compensation to customers paying more for their insurance on renewal than they should have was no surprise.
Over the past 20 months, the Mail has collected irrefutable evidence that insurers are breaking rules on pricing of auto and home insurance.
We have published our findings – and shared them with the Financial Conduct Authority.
Direct Line might just be the tip of a monstrous iceberg. It is very likely that other insurers will be found guilty of similar breaches of the rules in the coming months – and will have to pay compensation from the FCA.
Direct Line’s crime was to charge existing customers more for their insurance than someone purchasing identical coverage from them for the first time.
Direct Line might just be the tip of a monstrous iceberg. It is very likely that other insurers will be found guilty of similar breaches of the rules in the coming months
Early last year, the FCA banned such discriminatory pricing because it exploits loyal customers who are eager to renew coverage with their insurer rather than shop around for cheaper policies.
Often, these long-standing policyholders are elderly and mistakenly believe that their insurer always has the best financial interests in mind.
No chance. When the new rules came into effect, the regulator said the ban would save consumers £4.2 billion in premiums over a decade.
But inflationary increases in premiums in both the auto and home insurance markets are spectacularly wiping out any savings.
Some argue that Direct Line has come off lightly. After all, the FCA has the power to impose heavy fines on companies that do not comply with the pricing rules, even banning them from doing new business.
Perhaps these punishments await the next miscreants.