Shortly after her husband died, Kay Lawley* received renewal quotes from the couple’s home and car insurance provider, Ageas. She told the company of his death and was stunned that the quotes then increased by up to 15%.

Her car insurance quote went from £301 to £348, while her home and contents policy rose by almost 12% – from £1,039 to £1,161.

“When I asked why, Ageas was unable to give me any reason other than ‘that’s what comes up on the screen’,” she says.

“I was already the lead name on both policies and nothing else has changed. How can such decisions come at a time when the surviving partner is in no fit state to argue the toss, and also when a household’s income is likely to be reduced?”

Newly bereaved customers face paying a premium in their grief as analysts say that many insurers regard a single policyholder as higher risk.

Divorced and separated couples are also affected by this.

The little-known policy is based on algorithms that match individuals to the claims history of customers with similar profiles. Age, profession and marital status can affect pricing but this bereavement penalty has been denounced as particularly insensitive by customers adjusting to the loss of a partner.

Alison Roper* was informed that her home and buildings insurance would cost more when her husband died.

“They explain that your property is likely to be left less well attended when there is only one of you, even if, as in my case, you have two large dogs,” she says. “As for the car insurance, my husband was not named on the policy as he was no longer able to drive, but the price still increased.”

Another new widow contacted the Guardian when her renewal quote increased by about £440 after her husband died.

“Their home and contents policy with Swinton Insurance was in both their names, but dad was the main policyholder,” says her son Steve Elliott*. “The renewal quote was just over £200, but when Swinton heard dad had died, it became £641. I explained that nothing else has changed and that my mum was being charged £441 more for losing her husband. They blamed the system and said they could do nothing about it.”

The family has since accepted a quote for £229 from another insurance company.

According to the Association of British Insurers, providers are free to make commercial decisions on the prices they offer based on their risk appetite, and any change in personal circumstances can affect this. It declined to answer why a driver with a history of no claims is considered riskier once they live alone, or how widespread the bereavement premium is.

When contacted by the Guardian, Swinton apologised for the distress and said it will offer compensation. “Our agent should have escalated the matter to our underwriting team for further review,” a spokesperson says. “We are addressing this with the team to ensure learning and improvement.”

Ageas says joint policyholders are statistically less risky than solo ones and therefore receive a discount. This is forfeited when one of them dies.

“We understand that removing this discount could cause additional distress to bereaved customers who have lost a partner or spouse since their last renewal,” says its chief underwriting officer, Thomas Quirke. “To prevent this, we have a specific process in place to ensure that the joint policyholder discount is not removed when the policy comes up for renewal.”

Ageas acknowledged its process had failed in Lawley’s case. It has now refunded the additional premiums it had charged and sent her a bouquet of flowers. However, she will lose the discount when her policies are next renewed, “to reflect the true risk of being a sole policyholder in both motor and home insurance”.

She says: “I’m discovering that very little has changed in the past 30 years, and being a single person still comes with a premium, whether it’s insurance costs or travel deals. I had hoped that the world might have moved on from its bias towards coupledom, but clearly not.”

Fairer Finance says that insurers’ opaque pricing practices are undermining public trust, and that the increasing reliance on artificial intelligence to calculate premiums is making things worse. The campaign group wants government and regulators to insist on more transparency.

“These cases highlight the lack of humanity that sits within many insurers’ pricing algorithms,” says its managing director, James Daley. “Even if there is a statistical basis for these decisions, they lack sensitivity – and it’s all the worse that insurers are unable to explain the reasoning to customers because their pricing models are viewed as a trade secret.

“Current pricing practices are undermining consumer trust, and the use of AI means that complexity is accelerating.”

* Names have been changed