Despite watchdog ordering insurers to stop exploiting loyal customers, it is vital to continue shopping around, says VICTORIA BISCHOFF
At last! Insurers have finally been ordered to stop ruthlessly exploiting loyal customers by the City watchdog.
For years, greedy firms have shamelessly hiked premiums at renewal, leaving anyone who failed to shop around paying hundreds of pounds over the odds.
But from January 2022, this £1billion-a-year racket must end. It is a terrific triumph. Yet, we must remember this is insurers we are talking about.
Date to remember: For years, greedy insurance firms have shamelessly hiked premiums at renewal
And I just cannot wait until the New Year to see what devious little tricks they have up their sleeves, as they try to wriggle out of this one.
It is telling in itself that when the Financial Conduct Authority (FCA) announced the clampdown on Friday, insurers’ share prices didn’t even flinch.
Investors clearly weren’t too worried about insurers’ bottom lines taking a hit.
If you are a little cynical, like me, you might think this is because investors know insurers have a habit of finding innovative ways around rules designed to protect their customers’ interests.
In 2014 Money Mail launched a campaign to force insurers to print the previous year’s premium on renewal letters alongside the new quote so customers could clearly see if — or rather by how much — the price had increased.
Insurers were adamant this just could not be done. Their systems wouldn’t allow it, they claimed.
This was nonsense, of course, and in 2017 the City watchdog took up our suggestion. But it didn’t take long for complaints to start pouring in that some firms were burying this information in tiny print on page three or four of the letter.
Admiral was even more wily and printed the original renewal quote before discounts had been added, rather than what the customer actually paid, giving the illusion the price had not increased as much as it really had.
The FCA has already pre-empted foul play by specifying that insurers are not allowed to disguise discounts for new customers by offering cashback, loyalty points or shopping vouchers — although free gifts such as cuddly toys and cinema tickets were given a pass.
But even so, insurers are not to be underestimated. Perhaps we are entering a new age of insurance lotteries, which will see new customers able to win back a portion of their premium.
Or maybe insurers will start gifting higher-value items including iPhones and tablets. They may even just invent a new word for ‘discount’, such as ‘fiscal switching benefit in kind’.
In fact, I will send a ‘Money Mail sneaky insurer of the year’ award to the chief executive of the firm that comes up with the most outlandish way to bend the new rules.
But on a serious note, this is why it is vital customers do not think the new rules mean they can stop shopping around — particularly if some insurers do hike premiums to make up for lost profit from loyal customers.
Even if all firms play fair, you could still find a cheaper deal with a different insurer. This is especially true if your circumstances have changed or you’ve made a claim.
Prices also fluctuate daily, if not hourly. So just because your renewal quote was the same as what a new customer would pay when they sent it out, it could well have dropped in the weeks since.
And at the very least, you could bag a free cuddly toy.
Thank you for all your letters in response to concerns I raised last week about retailers scrapping the traditional paper receipt in favour of emailed copies.
Money Mail reader Doreen Garner said: ‘I was asked for my email address when spending £58 in Dunelm last Saturday. But I have still not received a receipt, so the salesman obviously made an error when inputting it.’
And Karen Robinson, from Lincolnshire, said: ‘When I needed to return a faulty item, I only had a laptop at the time, and when I tried to print the receipt it wouldn’t work. I spent nearly a day trying to figure out how to do it.’
One reader also said he was worried about repeating his email address in front of others.
This is exactly why customers must be given a choice.