New insurance rules are already helping customers
CONSUMERS whose annual home and motor insurance is coming to an end are being urged to act on new rules and shop around when the renewal notice arrives.
By doing so, they will find a better deal at a lower cost – especially those who have been with the same insurer for a long time.
Households are often penalised for their loyalty to one insurer by being hit with ever-rising premiums. In so doing they subsidise the insurer to attract new clients with lower rates.
Rules were introduced by the Financial Conduct Authority from the start of this month to stimulate competition and ensure more people end up with better value cover. The regulator hopes the move will save consumers £64million a year or more.
Under the arrangements, all general insurers are now required to send renewal notices ‘in good time’, giving policyholders the chance to search the market for cheaper cover.
The notice must also give the previous year’s premium with the new price, enabling recipients to see clearly how much the cost of cover has risen.
And there must be a message from the insurer encouraging the customer to shop around. This stipulation is applied more rigidly when a customer is renewing cover with the same insurer for the fourth time or more.
Then the insurer must use the following words: ‘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.’
Many insurers run highprofile advertising campaigns to imprint their brands in the minds of customers. Admiral famously ditched its sea lord in favour of a younger, female model. Direct Line has actor Harvey Keitel advising a hen party.
Yet the benefits of using a comparison website or speaking to a broker are marked. One reader who contacted The Mail on Sunday last week has already benefited from the new rules. He has two cars that are insured through the RAC. Though the combined cost of cover was going up by only £16, the ‘shop around’ prompts on the renewal notices made him check to see if he could get cheaper cover elsewhere.
Finding out that he could, he confronted RAC, which within five minutes came up with new quotes saving him £615 a year.
He told The Mail on Sunday: ‘I am delighted to have saved a bucketload of money, but I am also slightly miffed that it took my intervention to get my premiums reduced.
‘In future, I am going to be proactive with all my insurance at renewal. The same goes with my energy supplier, phone and broadband provider. I am constantly going to keep up with the best deals.’