Why does the AA hike its cover charges so heavily every year?

I realise that this is a topic that you have covered many times, but I continue to be amazed at the AA’s concept of how to reward customer loyalty. Last year my wife paid £79 for breakdown cover for herself and our son. This year’s renewal notice quoted £221.52: an increase of 180 per cent. As the policy is set up on a continuous annual payment basis, the AA is presumably relying on the fact that a sufficient number of people will simply allow the renewal to go through to compensate for any that choose to look elsewhere.

When my wife rang and challenged the increase, it miraculously came down to £120, a mere 52 per cent increase. This is cynical exploitation and the policy has been cancelled. Equivalent cover from the RAC has been obtained at a cost of £84 under a cashback deal, although I am sure that they too will try to hike the price on renewal next year. I know from your previous comments that you will put this down to the greed of private equity investment, but it is short sighted in the extreme even for a private equity company to exploit its valuable customer base in this way.

Asked on 15 December 2012 by PH, via email

Answered by Honest John
Many thanks. We know all that, but you have put it very well so I will try to repeat it all over again. Short-termism is isn't a problem if the Private Equity Fund sells the business. But it is if the potential purchasers do some research and realise what they are buying.
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