It is a familiar scene: you open the renewal letter from your insurer, and the quote is much higher than last year, even though nothing has changed. So you phone up and complain, and maybe suggest you will take your business elsewhere. Suddenly and miraculously, you are offered a much better price.
Most of us would chalk that down as a serious win – but what if you hadn’t called?
The consumer organisation Which? is concerned that customers might be being “taken for a ride” on renewals. It wants the Financial Conduct Authority (FCA), the UK regulator, to investigate whether insurers are falling short of requirements to offer “fair value” to their customers.
Which? surveyed more than 2,000 adults with car insurance and found that “a large number” had benefited from reductions to their renewal price, with some getting £200 or more lopped off the original quote.
Six in 10 said they had got into a discussion with their insurer about the quote they had been offered, with most of them doing so over the phone. In 61% of cases this led to them being offered a lower price.
The average saving was £64 a year, although some received much more sizeable reductions. One in 20 said they had saved more than £200.
Which? says that if significantly better prices are offered to customers, but only after they make a fuss, insurers may be in breach of the FCA’s consumer duty rules, which came into force in July 2023 and require financial firms to demonstrate their products provide fair value for customers.
Mystifyingly large price rises at renewal are certainly not unusual. Guardian Money has featured several cases during the past few months, including the home insurance policyholder who was quoted £4,730 for renewing a policy that had previously cost £440, and another home insurance customer whose quote leapt from £518 to £1,353.
With 40% of survey respondents not talking to their insurer about the quoted price before renewing, this suggests many customers “may be unfairly paying over the odds”, Which? says.
It has outlined tips for negotiating with your insurer over the price.
If the renewal price has gone up, ask the company to justify the increase.
Point out any lower prices you have found elsewhere, and ask your insurer if it can better those offers.
If it is not able to provide a better quote, say that you are willing to go elsewhere. If you have been a loyal customer for many years, mention that.
If your insurer isn’t budging much, one option is to ask for an add-on (such as breakdown cover) to be thrown in to provide better value.
The Association of British Insurers says that variations between an initial quote and a bespoke over-the-phone offer “often come down to a deeper dive into individual factors which may have changed from the previous policy – such as your vehicle’s security measures, driving habits, level of cover and choice of voluntary excess”.
It adds: “Our members take their commitment to their customers and their regulatory requirements seriously.”
Alice J. Roden started working for Trending Insurance News at the end of 2021. Alice grew up in Salt Lake City, UT. A writer with a vast insurance industry background Alice has help with several of the biggest insurance companies. Before joining Trending Insurance News, Alice briefly worked as a freelance journalist for several radio stations. She covers home, renters and other property insurance stories.