Now car insurers are asked to give their lowest prices to existing customers
On the back of Nationwide’s existing-customer-only top mortgage deal yesterday, now calls are out for the FCA to investigate motor insurers save their best rates for new customers to the detriment of loyal drivers.
Speaking to the Insurance Times, Ian Hughes, Chief Executive of Consumer Intelligence, questioned the practice of offering discounted premiums to new customers but not to existing clients. “Is it a fair outcome that a customer that has been with you for six years could, for instance, get a premium that is half what they are currently paying if they were a new customer?" he asked, plaintively.
Mr Hughes is firmly on the side of the fence that says it is not fair, calling on the FCA to examine new business discounts as part of its focus on ensuring fair outcomes for customers. And he’s got a point, particularly as changing insurer every year is more difficult for certain groups of consumers.
But he doesn’t take the soft option and blame the comparison sites, as after all, that’s the way many people seek out the lowest renewal premium. Hughes lays the blame squarely at the door of the insurers themselves:
“A lot of people try to put the blame at the door of price comparison sites, but they are not to blame for this problem. This problem is created by introductory discounts – by giving your best prices to your least loyal customers.”
However, despite calling for FCA intervention, what Hughes is really hoping for is that the insurance industry will see the error of its ways and change policy before being forced to act by the regulator.
He said: “It is always my hope that the industry can be grown up enough that it can recognise and fix its own failings. When a regulator has to step in, nine times out of 10 that creates issues and challenges all of its own.”
But are the insurers really going to change? Surely it only needs one pioneering insurer to set the ball rolling in the looking-after-existing-customer stakes? Unfortunately not. “The problem is that if any one company starts to try and address the problem then, unfortunately, they will lose a lot of business,” warns Hughes. “No one company can fix this by themselves. It needs to be corrected as an industry and that is a big challenge.”
So is a self-correcting insurance market just pie in the sky? Looks like we will have to wait for regulatory interference before we can all stop chasing new deals every year. Besides- if your insurer told you they were changing strategy and were offering you, their existing customer, their best prices, would you believe them anyway?