FCA has Government backing to investigate excessively high renewal premiumsJuly 8th, 2013 • 3 Comments
Everyone knows that the best way to get a good renewal price on your insurance is to shop around. Besides the extra cashback you could earn by switching, most insurance companies will offer better deals to new victims customers than to those they have already snagged.
However, a BBC Moneybox programme back in March highlighted that the price differential can be as high as eight times the difference, with some companies refusing to offer existing customers the same deal even when challenged.
However, on Friday, the Chairman of the Commons Treasury Committee Andrew Tyrie confirmed the FCA is investigating the practice by insurers in the UK with a view to protecting the vulnerable.
While you might surmise that the idiots people who don’t bother to shop around might deserve any financial penalties they suffer, Mr Tyrie is more concerned about those who can’t, rather than those who won’t. In a nearlier open letter to the chair of the Association of British Insurers (ABI), he wrote “such practices appear to penalise long-term loyalty and are to the detriment of those less able to access price comparison resources, particularly the elderly.”
The ABI responded by saying “extreme differences” between automatic renewal prices and those charged to new customers were unusual, although “varied pricing aimed at attracting new business was to be expected.”
In a statement released on Friday, Mr Tyrie said: “The previous regulatory regime failed to protect consumers. It must do better this time around…The FCA…can do a lot to help consumers, especially vulnerable consumers,” adding “If people are given a more meaningful choice, they are less likely to be ripped off.”
He does know he’s dealing with insurance companies, right?
If they’re so old and vulnerable that they can’t pick a phone up to get a quote, what the fuck are they still doing on the roads?
It’s not just car insurance.
Many companies have this strange idea that potential new customers must be feted with attractive offers while existing customers are there to be extorted – a sort of disloyalty scheme.
One of these days somebody will come up the bright, but obviously sensible, idea to most people to reward customers for loyalty – say a small price reduction or other incentive after a year and a bigger one after say five years.