The FCA’s intervention on car insurance renewal letters may be starting to make a difference, with more drivers reporting that they have seen the prescribed wordings and shopped around or switched provider as a result. That’s according to new research from GoCompare, which operates one of the UK’s biggest comparison and switching services.
It is timely news as September is historically the busiest month for car insurance purchases and renewals, due to new car registrations. GoCompare’s twice yearly research into people’s renewal habits shows that there has been some progress made in two key areas that the FCA sought to address through its ‘transparency in insurance renewals’ work in April 2017***:
- An 8% jump in the proportion of drivers reporting that they recall seeing last year’s premium on their renewal letter (46% compared to 38% in February 2018).
- A 9% increase in drivers stating that their exiting premium was “shown clearly” on their renewal letter (36% compared to 27% in February 2018).
- 3% more drivers said that they recalled seeing wording encouraging them to check that their cover levels were still appropriate (30% compare to 27% in February 2018).
- And 5% more drivers remembered seeing a wording encouraging them to shop around for a better deal (17% compared to 12% in February 2018).
This follows the FCA issuing a warning in April that some insurers weren’t displaying the key information prominently enough.
GoCompare is reporting a slight drop in the number of drivers automatically renewing their cover with the same provider from 17% in February 2017 (the result from GoCompare’s research before the FCA’s guidelines came into force) to 16% in August 2018, with an accompanying rise in the rates of shopping around and switching – 32% of drivers now say they switched provider at their last renewal, compared to 30% before the FCA’s guidelines (February 2017).
However, despite these encouraging signs, 16% of drivers are still allowing their insurer to automatically roll them over for another year without first checking if they could get a better deal, and this is costing them a whopping £1.4bn a year.
Commenting on the research findings, Georgie Frost, consumer advocate from GoCompare Car Insurance, said: “It is certainly good news that more motorists are seeing this important information on their renewal letters, and our research gives the first indication that the FCA’s initiative could be starting to make a difference.
“However, it is early days and we have to keep these results in perspective. The majority of drivers didn’t recall seeing their current premium on their last renewal letter, and just 17% of people say they saw the message encouraging them to shop around. Interestingly, our research also revealed that after reading their renewal letter, 24% of people felt that their insurer just wanted them to renew for another year.
“The FCA warned insurers to up their game in April, therefore we need more time to see if this initiative really can make a difference. But realistically, we need a lot more than 17% of motorists noticing a reminder about shopping around if we are to break the cycle of five million UK drivers auto-renewing their policy, without checking if they could get a better deal elsewhere.
“Customers switching and saving with GoCompare could save £268.69**** – which goes to show that when it comes to car insurance, loyalty doesn’t pay.”
Top tips from GoCompare to get the best car insurance deals:
- NEVER accept your renewal quote without first checking that the price you are offered is competitive – even if your insurer was the cheapest last year,
- Give yourself time to review your cover – note the renewal date in your diary and shop around at least a week before your policy renews to get the best deal,
- Compare prices AND check the small print. Make sure you’re making like-for-like comparisons and understand all the charges, any penalties, exclusions and terms and conditions you will be required to meet.
Visit GoCompare for more information on switching your car insurance: https://www.gocompare.com/car-insurance/
For further information please contact:
Anders Nilsson or Martyn John at GoCompare on 01633 654 054 / 01633 654 725
Gordon, Jason or Liz at MAW Communications on 01603 505 845
Keep up-to-date with GoCompare on Twitter; @GoCompare
Notes to editors
*On 14 August 2018, Bilendi conducted an online survey among 2,006 randomly selected British adults who are Maximiles UK panellists and have car insurance. 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.
**Department for Transport’s ‘Vehicle Licensing Statistics: Q3 (Jul-Sep 2017)’ by the end of September 2017 there were 31.1m cars licenced for use on the roads in Great Britain. 16% of motorists auto-renewed their car insurance policy at the last renewal without checking prices. 16% of 31,100,000 = 4,976,000.
4.98m x GoCompare’s average shop around saving of £268.69 = £1,426,569,440 rounded to £1.4bn.
*** On 1 April 2017, the FCA introduced new guidelines for insurers to ensure that all renewal letters display the customer’s existing premium as well as their renewal premium, so the two can be easily compared. Alongside, there should be wordings to encourage customers to check the level of cover offered is still appropriate and remind them that they are able to compare prices and levels of cover offered by alternative providers.
Where the customer is renewing for the fourth or subsequent time, the firm must include the statement: “You have been with us a number of years. You may be able to get the insurance cover you want at a better price if you shop around.”
****According to independent research from Consumer Intelligence in April 2018, 51% of customers could save up to £268.69 with GoCompare Car Insurance.
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).