New research*, commissioned by GoCompare Car Insurance, reveals that 50% of drivers think it should be illegal for insurers to reserve the best prices for new customers at the expense of loyal policyholders.
Most (61%) survey participants feel insurers treat their existing customers less favourably by charging those who renew their cover higher prices than new customers. While many businesses - from retailers, restaurants to hotels – reward customers for their loyalty, insurers tend to charge existing customers higher premiums than new ones.
When their insurance comes up for renewal, motorists can make substantial savings without compromising on cover by simply changing provider. Customers shopping-around for cover on GoCompare Car Insurance could save up to £247.29**, but the research found that, at their last renewal, 62% of motorists allowed their car insurance to automatically renew.
Unfair car insurance renewal practices have attracted the attention of regulators. The Financial Conduct Authority (FCA) has taken steps to force insurers to improve renewal information to help customers make a better-informed decision about their cover needs and how much they need to pay. Renewal letters are now required to show both the renewal cost as well as the premium paid the previous year, wording to encourage customers to check the level of cover offered is still appropriate, and a reminder that they can compare prices and levels of cover offered by alternative providers.
Where a customer is renewing for the fourth or subsequent time, insurers must alert them to the fact they could get a better price if they shop-around.
Despite the FCA’s new renewal regime being in force since April 2017, GoCompare Car Insurance’s research found that at their last renewal, only 46% of drivers remembered seeing last year’s premium alongside their renewal price. Just a third said the previous year’s premium was clearly shown on their renewal documents. Only 29% remembered seeing a statement advising them to check the cover level continued to meet their needs, and 22% recall seeing a ‘shopping around’ message.
Last year, the Competition and Markets Authority (CMA) released a series of recommendations to tackle unfair loyalty penalties. These include naming and shaming insurers who overcharge loyal customers, and using targeted price caps to protect vulnerable customers.
Lee Griffin, one of the founders of GoCompare, commented: “Car insurance is a market where dual pricing has existed for a long time and where comparison sites have made the practice far more transparent for people who can often see exactly how much their current insurer is discounting for new customers. There’s absolutely no good reason why insurers should be able to do this - other than they’ve been able to get away with it. Loyal customers have every right to feel ripped-off.
“The FCA and CMA have taken positive steps to improve the transparency of renewal pricing, encourage customers to shop-around, and to close the gap between premiums for existing and new customers. But the onus remains on customers to act to avoid paying more than necessary, rather than on insurers to change their pricing policies. . It’s high-time the insurance industry reset the balance towards loyal customers.”
Lee Griffin continued: “At renewal, car insurers offer to make life easy by continuing their customers’ cover without them needing to take any action. While this helps ensure drivers don’t inadvertently allow their cover to expire, the convenience of auto-renewing usually comes with a hefty price tag. Our research shows that most drivers simply allow their car insurance to auto-renew - despite all the warnings of rip-off pricing.
“In lieu of legislation to close the gap between renewal and new business pricing, it’s imperative that people keep shopping-around and switching to avoid getting ripped off.”
For further information please contact:
Anders Nilsson or Louisa Marsden at GoCompare on 01633 654 054 / 01633 655 132
Gordon, Jason or Liz at MAW Communications on 01603 505 845
Keep up-to-date with GoCompare on Twitter; @GoCompare
Notes to editors
*On 30 January 2019, Bilendi conducted an online survey among 2,000 randomly selected British adults who are Maximiles UK panellists. The margin of error-which measures sampling variability-is +/- 2.2%. The results have been statistically weighted according to the most current education, age, gender and regional data to ensure samples representative of the entire adult population of United Kingdom. Discrepancies in or between totals are due to rounding.
**Based on independent research by Consumer Intelligence during 01 Dec to 31 Dec, 2018: 51% of consumers could achieve a saving of up to £247.29 with Gocompare.com car insurance based on a comparison of 28 companies
GoCompare is a comparison website that enables people to compare the costs and features of a wide variety of insurance policies, financial products and energy tariffs.
GoCompare does not charge people to use its services, and it does not accept advertising or sponsored listings, so all product comparisons are unbiased. GoCompare makes its money through fees paid by the providers of products that appear on its various comparison services when a customer buys through the site.
GoCompare does not sell its customers’ data.
When it launched in 2006, it was the first comparison site to focus on displaying policy details rather than just listing prices, with the aim of helping people to make better-informed decisions when buying their insurance. GoCompare has remained dedicated to helping people choose the most appropriate products rather than just the cheapest, and has teamed up with Defaqto, the independent financial researcher, to integrate additional policy information into a number of its insurance comparison services. This allows people to compare up to an extra 30 features of cover.
GoCompare is the only comparison website to be invited to join the British Insurance Brokers’ Association (BIBA) and is authorised and regulated by the Financial Conduct Authority (FCA).