Like most Britons, I hate haggling — no wonder the insurance sharks prey on our misplaced loyalty

THErE’S an eye-opening sequel to a column I wrote in the spring, discussing research into Grumpy Old Man Syndrome by scientists at the University of London. In a throwaway line at the end, I happened to mention that I was feeling especially grumpy that week, because a plumber sent by Thames Water’s insurance arm, HomeServe, had inadvertently left my family without mains water for three days after he’d come round to fix an overflowing tank in the loft.

As I observed at the time, my annual premium of £712.32 seemed an awful lot to pay for being forced to wash, shave and flush the loo with rainwater from the butt in the garden. Well, on the day that column appeared in May, a very friendly woman from the Press office at HomeServe got in touch to apologise and inform me that I really needn’t be paying so much for my insurance.

Would I be interested, she wondered, in switching from the policy I’d had for years to the HomeServe Cover8 plan, which would cost me £480 a year for more extensive cover than I’d enjoyed up to then?

Like, duh (if I may borrow one of the more irritating catchphrases of the young). As I’ve often confessed, I’m hopeless at maths. But even I could spot that £480 was a considerably smaller sum than £712.32. By my calculations (though I stand to be corrected), it represented a saving of £232.32 per annum.

Kicked

Add the fact that this new policy would insure me against all the risks covered by my old one, and more besides, who but a complete mug would say No?

The friendly Press officer said she’d arrange for a colleague to sign me up and — kerching! — I’m now £232.32 a year better off. I’m also covered against just about everything that could go wrong in the house, from rat and/or mice infestation to broken external doors, noisy boilers, leaking pipes and faulty wiring, with an annual boiler service thrown in.

Now, I suppose the conclusion I’m meant to draw from my rolls-royce treatment is that the people at HomeServe are exceptionally nice, and keen to bend over backwards to help their most loyal customers.

Call me a grumpy old cynic, but I don’t see it that way. In my view, the moral of this story is that HomeServe is exceptionally kind to customers who happen to have jobs writing weekly columns in a newspaper read by millions in its print editions, and zillions more online. As for the rest of its clientele — and they must include one or two who aren’t national newspaper columnists — well, they are there to be milked for every penny they’re worth.

I mean, how long would the insurers have let me go on shelling out £712.32 for inferior cover if I hadn’t happened to mention it in these pages? For ever, I imagine — and they would have gone on cranking up the premiums, year after year, until I finally kicked up a fuss.

Perhaps I’m being unfair. It could be that the firm sent me bumf through the post long ago, alerting me to the fact that it had much better deals on offer. If so, it passed me by. It’s also possible, I suppose, that the delightful young woman in the Press office spends her entire week ringing round loyal customers, from every walk of life, advising them to switch to Cover8. But somehow I doubt it. My guess is that HomeServe, like most of the rest of the insurance industry, has a deliberate policy of punishing loyalty by charging higher premiums to those longstanding customers it judges least likely to take their business elsewhere.

The motto seems to be: hook ’em with tempting introductory offers, then screw ’em for the rest of time — or at least until they start shopping around.

As anyone with any moral sense will agree, this stinks to high heaven. I’m not thinking chiefly of myself — too lazy or, as I like to think, too busy to shop around (and, all right, too comfortably off to think it worth the bother).

No, my sympathies lie with elderly people and others who may be unfamiliar with the internet and don’t know how to navigate their way through the maze of price comparison websites.

Oppressed

Too often they put their trust in established names, thinking that companies jealous of their reputations wouldn’t dream of ripping anyone off — least of all their most loyal customers. Even I — the least trusting of souls — had idiotically assumed that £712.32, steep though it undoubtedly seemed, was the going rate for the sort of cover I wanted. As it turned out, HomeServe was just trying it on.

Like countless others, therefore, I rejoiced this week when the Financial Conduct Authority announced an investigation into the pricing structure of the insurance industry, so long campaigned for by those tireless champions of the exploited and oppressed, my colleagues on Money Mail.

Warning that people are at risk of being seriously disadvantaged by hidden pricing practices, the watchdog says that not enough is being done to protect vulnerable customers — while the worst exploited are those of us who stay with the same car or home insurance firm, year after year. According to some estimates, this loyalty penalty racket costs households a breathtaking £4 billion a year.

Take the case of Kim Lewis, 56, a cash office assistant who had insured her threebedroom semi in Gloucester with the Prudential for almost 30 years until she received a renewal quote of £568 last August — up from £470 in 2014.

When she rang the Pru to question the premium, she was told she need pay only £330. As she told yesterday’s Mail: ‘I couldn’t believe it. A 40 per cent discount, just like that?’

Showing a great deal more wisdom than me, she then rang round other providers — two of which offered her the same cover for less than £190 — before settling for the AA, which quoted £185. ‘I have been a customer of Prudential since 1988,’ she said. ‘This smacks of sharp practice and it leaves a very sour taste in the mouth.’

I couldn’t put it better myself.

Gullible

What makes it so much worse is that we in Britain are particularly ripe for exploitation. Used to fixed prices in the shops, we have no culture of haggling — and most of us are pretty bad at it. We’ve also grown accustomed to being rewarded for loyalty, whether with Nectar card points for regulars at the local supermarket or air miles for frequent fliers.

But in the insurance industry, the very opposite seems to apply: the more loyal we are, the more outrageously we’re overcharged. And when fixing our premiums, firms don’t merely assess us for risk, according to our driving record or whether or not we live in burglary hotspots. They also take into account how gullible they think we may be, and how likely or unlikely we are to take our business elsewhere.

Isn’t this all the more extraordinary, since the financial sector’s prosperity through the ages has been built entirely on the City’s reputation for impeccable integrity and trustworthiness?

Indeed, the very vocabulary of the industry hinges on dependability — words such as ‘credit’, ‘bonds’, ‘trust funds’ and ‘mutual assurance’.

True, this began to change with the financial crash and the PPI scandal, when some of us started to wonder if we could ever trust the City again. But what is surely clear is that the sector must reestablish its good name PDQ if it is to prosper after Brexit. If the FCA’s probe into insurance pricing helps clean up the sector, then more power to its elbow.

A brief footnote: I feel a little bad about picking on HomeServe, the only insurance company that has ever done me a personal favour. But when researching this column, I looked up Cover8 on the internet, where I discover that the policy is now on offer for a mere £216 in the first year (admittedly with a £60 excess per claim).

The company’s website goes on: ‘ The price will be different for existing and returning customers.’ Don’t you just love that word ‘different’?