It seems to have become the norm in the motor insurance world that the quotes motorists receive to renew their insurance are often higher than many first time offers by other companies. In some extreme situations it has also been witnessed that renewal quotes can be higher than the original payments, causing many motorists to question their insurance companies.
Internet-savvy motorists have also discovered that their company, who offered them a pricey renewal quote, are offering the same cover cheaper through price comparison sites. This is a very risky strategy for insurance companies, who are assuming that loyal motorists will accept the higher renewal quote without question/looking around. This demonstrates how little the companies are taking into consideration individual drivers’ circumstances, skills, and accidents to date.
It has been found that insurance premiums have increased by 17% in the last year alone, with insurance companies quick to offer excuses of increased whiplash claims and increased fraudulent scams.
The BBC’s Watchdog programme highlighted this ‘trick’ that insurance companies use. Interestingly enough, it is not limited to the smaller insurance companies – instead companies like MoreThan, Admiral and Swiftcover were all offenders. The programme followed a MoreThan customer who had just received a renewal quote of £750. After visiting some price comparison websites, he found the same cover, from the same insurer, for just £512. MoreThan were contacted, and when demanded an explanation, the best they could do was offer the customer the £512 rate for renewal, instead of giving any justification as to their renewal quote pricing structure.
MoreThan later spoke to the BBC and stated that they need low premiums to attract new customers, but existing customers are quoted renewals based on the risk they pose to the company. If that truly were the case, then why were they so quick to offer the customer mentioned above the cheaper renewal rate?
Another customer the BBC Watchdog programme highlighted was a customer from Admiral. Paying £1000 a year for 2 cars, he was shocked to receive his renewal quote, which required him to double his premium at £2000. Searching online, this customer found exactly the same type of cover with the same insurer for just £961. After ringing up Admiral, they again were quick to offer him the cheaper rate without fuss. When asked for an explanation for this strategy, they too attempted to give a similar justification for their pricing structure.
Having read about these case studies, it is imperative that all drivers who manage their insurance do not just accept the renewal quote from their insurance company that gets posted through the door. At the very least, customers should check online price comparison websites, to ensure they are aware of the prices their insurance company are offering to new customers. According to GoCompare, some 27% of people do not even do this small step, allowing their insurance company to automatically renew their policy at the end of the existing one. Estimated savings which drivers could have saved by not doing this reach around £3.1 billion.
Everyone recognises that with the current economic climate, companies are feeling pushed to retain their profits. However, it becomes quite unacceptable when companies are resorting to these sort of tactics in an attempt to fleece their loyal customers. It means that customers are having to work extra hard in order to spot these tactics in an attempt not to trip over them. The sheer fact that these companies are readily offering the lower, new premiums when loyal customers complain about their renewal quotes is evidence to the fact that they are just trying to rely on those that will renew automatically without questioning the raised price.