Last year a survey of insurance companies found that being loyal to your insurance company gets you nowhere. Insurers give cheaper deals to new customers and offer worse value the longer you stay and many customers who have stuck with their insurer believe their loyalty has been abused. Home or car insurance is routinely offered to new customers cheaper
The multi-billion-pound insurance industry, has been found to be discriminating against millions of loyal customers in the relentless pursuit of new business.
An investigation into the world of insurance showed widespread disillusionment among many former longstanding customers of some of the biggest insurance brands in the country.
Customers who until recently have religiously stayed with their insurer through thick and thin believe their loyalty over the years has been abused. They are angered by the fact that the cover they have or had – typically home or car insurance – is being routinely offered by their insurer to new customers at a far cheaper price.
And no longer are people being fooled by firms marketing themselves as elderly friendly, such as Rias and Saga, which sell cover to the over-50s. People are annoyed as they realise these firms are amongst the worst offenders
Though a rising number of people are now wise to the anti-loyalty stance adopted by most insurers and either shop around at renewal or bargain with their provider, they remain aghast that companies are not interested in rewarding loyalty.
Some customers now rotate their insurance providers so as to extract the keenest priced premiums.
James Daley, a consumer champion at website Fairer Finance, says analysis highlights the ‘dysfunctionality’ of the insurance market and confirms the need for a major overhaul of its practices. Recent regulatory action, he says, has been directed at encouraging customers to shop around more for insurance. Although welcome, he fears that those customers who remain loyal – either through a sense of duty or inertia – will be discriminated against more than ever.
Insurance costs rose in general last year, a result of tax hikes (insurance premium tax) and, in the case of car cover, government changes that have resulted in insurers paying out more for personal injury claims.
Experts said last year that motor premiums were rising on average by between 11 per cent and 18 per cent
Increases for home cover are gentler, at seven per cent. But these averages hide some shocking rises insurers are trying to pass on to longstanding customers, who are usually elderly. One case study came from 83-year-old Dennis.
This is what Dennis Herbert from Tyseley, Birmingham found, Dennis is a retired train driver. Now aged 83, he is proud of the fact that in 65 years of driving he has never made an insurance claim. For the past 35 years he has driven around in a Mini Clubman Estate. He is proud of his car and says: ‘Nobody apart from myself and when it goes in for an MOT has ever put a spanner on it.’
However, Despite Dennis’s exemplary driving record and the fact he drives no more than 250 miles a year – a result of having to care for his wife who is stricken with Alzheimer’s – his longstanding insurer LV= took a different view.
In May 2017, it quoted him £456 to renew his cover – a jump of nearly 19 per cent on the year before and an increase over two years in excess of 25 per cent.
Annoyed, he rang LV= to see if he could get the quote reduced but it refused to budge. So, he went to classic car specialist Lancaster Insurance which offered him equivalent cover for £255. Pleased with his success, he challenged his home insurer Co-op Insurance when his policy came up for renewal. Despite being with the Co-op since 1968 when he bought his house, it wanted to increase his premium 19 per cent to £238. Again, when it refused to reduce the quote, he found alternative cover with the Post Office for £197 – less than he had paid the Co-op last year.
Dennis says: ‘My years of loyalty meant nothing to either Co-op or LV=. Changing providers was a bit daunting at my age, but I was not going to have my finances impaired by inflated insurance premiums.’
A number of insurers market themselves as being elderly friendly or catering for a specific profession. But this does not mean customers get a fair deal. Far from it. As Retired police officer Brian Hodgson found out. He has always trusted Police Mutual for insurance. when he recently received notice of sharp premium increases for both his home and car insurance, he decided enough was enough. Having never made a claim in more than 50 years of being with the insurer, he made enquiries elsewhere and found cheaper cover.
Now aged 82, Brian said ‘All the time I thought I was being treated favourably when I was not,’ he says. ‘Shame on them for failing to reward my loyalty.’
Brian is not alone. There have been many complaints from customers who have been loyal to the same companies for years who have found their premiums increasing, in some cases by as much as 52%, which recently happened to a customer who had been with Saga for over 15 years. Saga told him the increase was a general rise throughout the insurance industry.
He has now found cover cheaper than he had been paying with Saga. ‘It is irksome that 15 years of loyalty counts for nothing,’ he says.
Many of us stay with the same insurer for years because it is easy and most have assumed they get favourable renewal quotes because they have been with the companies for some time. No longer. It makes sense to change regularly. Some customers are now changing their insurance policies on an annual basis and reaping the rewards for not being loyal.
If you decide to change you could save hundreds of pounds. Insurers are now required by the regulator to provide policyholders with details of their existing premium when they give a renewal quote. It means customers can see the price hike they face without having to search for old paperwork.
What to do next? Well, armed with the renewal notice, all policyholders should then use a comparison website to see if they can find equivalent cover elsewhere at a cheaper price or look for quotes from companies who are online but not on comparison websites, such as direct line. It is easy to do and to get a quote.
Invariably policyholders will go back to their existing insurer and ask if it is prepared to match or slightly undercut the price offered by the cheaper provider. Some firms will relent at this point. If they do not, move away.
Most renewal letters carry the phrase ‘Please contact us if you want to renew your insurance. If you can find a lower quote elsewhere we are sorry to see you go.
Many think the letter should state: ‘We’ve reviewed your claims history and length of time with us and this is the lowest quote we can offer.
So, what do the insurance companies say. The Association of British Insurers said: “Insurance is a competitive market with many existing customers shopping around to get the right policy for their needs at the best price. We realise that no competitive market is perfect and relies on customers shopping around to get the best deal, including taking advantage of any introductory discounts.”
“We and our members want a market that operates in the best interests of customers. This is why we pushed for the changes brought in earlier this year (2017) by the regulator, such as showing the existing premium on renewal notices. This should encourage customers to review their cover and consider other deals.”
“We continue to work to support a market that remains competitive, with choice and transparency for both existing and new customers. This includes engaging with the regulator as it continues to look at how the general market operates.”
It would seem the industry wants us to shop around. Maybe that way all the “competitive” companies get a slice of the pie. So, the moral is, there is no loyalty in the world of insurance. Changing your policies annually is the best way to go. Imagine if there was a company that rewarded loyalty, by trying to reduce premiums year on year, how many customers they would have. All the other companies wouldn’t get a look in! Maybe that’s the point!