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More than a third of drivers hit by insurance ‘loyalty tax’

Published 25 February 2019

Millions of drivers could be paying too much for their motor insurance because they don't shop around for cheaper cover.

A survey of 2000 drivers by comparison website MoneySuperMarket found that two thirds (67 per cent) of motorists had seen a £40 increase in the cost of a fully comprehensive policy over the past 12 months, while over a third (35 per cent) said they routinely allow their policy to auto-renew without looking for a better deal.

A similar poll by GoCompare found that 27 per cent of drivers have been with the same insurer for three years or more, while those who pay for their car insurance in monthly instalments are 54 per cent more likely to allow their cover to automatically renew than those who pay annually.

A report by data analytics company Consumer Intelligence found that 51 per cent of drivers could save at least £259 by shopping around for car insurance. 

These worrying trends follow a 2018 report by data analytics company Consumer Intelligence that found 51 per cent of drivers could save up to £262 by shopping around for car insurance online. 

In April 2017 the Financial Conduct Authority (FCA) launched the auto-renewal bill, which forces insurers to clearly show the previous year’s premium at each renewal so motorists can easily compare it to the new price. However, despite the new rules, millions of drivers allow their policy to roll-over without shopping around for a cheaper premium.

Emma Garland, data scientist at MoneySuperMarket, said: “Despite significant cost savings to be made by switching insurer, over a third of drivers still allow their policy to automatically renew.

“Not only is this costing people millions of pounds a year at a time when insurance premiums are on the rise again, it also highlights that the FCA’s legislation hasn’t had a huge impact on consumer behaviour."

Comments

   on 25 February 2019


This year (Jan) my insurance renewal premium incresad from £340 to £432.
Using online comparison site I received a like for like quotation of £306 - from my current insurer ! They natuirally matched the online price, but could not offer any reasonable justifcation or rationale for the Loyalty penalty. I still await promised written comment from the company .

   on 25 February 2019

The problem is that older drivers have difficulty finding alternate insurers and one's existing insurer, even though you have maximum NCDs know this. Older drivers over 80 despite an excellent record are held to ransom.

Howard Buchanan    on 25 February 2019

My experience last year mirrored that of the first posting above. Renewal price was way above that available online from the same company, so I renewed without speaking to anyone, on the link from the comparison site offering the lower price.
Shortly afterwards I got a "sorry you're leaving us letter".They had no idea I was still with them, but on far more advantageous terms than their renewal "offer"! So who's kidding whom? The sad fact is that the law of the land obliges drivers to participate in what is not much different from an extortion racket: car insurance, where the devil does indeed take the hindmost and fortunes are daily made from the unwary by the unscrupulous and uncaring.

wheresmahat    on 25 February 2019

Our present insurer Geoffrey Ltd. Have, for the past 2 years charged
only a couple of pounds extra per year.
I've looked at Comparison Sites for both renewals and Geoffrey
Insurance has always placed on top!
Good friendly service with English speaking Operatives.

jnd    on 25 February 2019

My experience is that it is a deliberate policy of the insurers I've had to deal with to make it as hard as possible to stop automatic renewal, it's been the same for me for several years now and I NEVER give whoever tries it on a chance to quote again. This year, for instance Green Flag, despite two letters by steam mail - there is (deliberately?) no direct email contact and I spent a total of 55 minutes in three attempts to talk to one of their representatives - with neither letter even acknowledged, let alone answered, I went to my bank and told them under no circumstances let Green Flag take money out of my account and they duly notified them, while I was there, not to try. But they did anyway, and the bank paid it! Duly refunded but if I hadn't been to the bank first it would have been in done for Green Flag. In the meantime I got a quote from them as a new customer - over £10 cheaper than my renewal price, which is my reward for NOT calling them out even once. It's a racket based on inertia and ignorance but they do their sums and for every punter that objects and stops it there's more that let it rollover and get ripped off.

NickNike    on 25 February 2019

More fool those who get stung. Does their laziness work in my favour? Apparently 60% don't shop around for best energy prices. Obviously a lot of people just don't bother.

hissingsid    on 25 February 2019

I save money by paying my premium annually. Paying monthly incurs additional charges, and paying by direct debit makes it all too easy to forget to shop around as the renewal date approaches.

I stayed with my existing insurer at the last renewal, when my premium actually reduced. I might have found an even lower premium elsewhere, but I want the best cover, not the cheapest.

Ted Tomlin    on 25 February 2019

I have been with a well known company for a number of years. Last year was £390. This year they want £419 and increase of nearly £30. Yet if I go online with a comparison site I can get the same insurance with the same company for £375 work that one out. Needless to say I have found the same insurance with another company for £320.

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