Mail victory as insurers face probe for f leecing loyal customers

INSURERS are to be investigated by the City watchdog over concerns they unfairly hike prices for millions of loyal customers.

The Financial Conduct Authority warned yesterday people were at risk of being seriously disadvantaged by hidden pricing practices with not enough being done to protect vulnerable customers.

Customers who stay with the same car or home insurance firm year after year are routinely charged hundreds of pounds more than those who shop around. This socalled loyalty penalty is estimated to cost households more than £4billion a year.

The FCA will also investigate concerns that some insurers are breaking rules, introduced in 2016, and not making clear last year’s price when they offer a renewal quote so customers can compare costs.

The probe is a major victory for Money Mail which has long campaigned for an end to the loyalty rip-off. Gareth Shaw, money expert at consumer group Which?, said: ‘For years, loyal policyholders have been exploited by insurance providers, punished by excessive premiums and have had to battle with unclear pricing that makes it difficult for people to understand whether or not they’re getting a fair deal.

‘Customers who prefer to stay with one provider are at risk of being hit with vastly overpriced premiums when little has changed in the service they receive. It’s right that the regulator tackles this sector to ensure customers aren’t punished for their loyalty and that pricing is clear and transparent across the industry.’

The regulator said firms may deliberately target customers they thought were unlikely to switch with enticing teaser deals. This means insurers may be earning a bigger profit from customers who could be vulnerable or older.

Often these customers believe they will get a better deal by remaining loyal to one insurer, forget to shop around before their policy renews or may have been encouraged to stay put because the price increase is presented in a way that suggests action is not needed and they are getting the best deal, the regulator added. The FCA also raised concerns that some insurers may use personalised information to price premiums that is protected against by the Equalities Act such as their ethnicity, gender or whether they are married.

It said it had written to the chief executives of insurers to warn firms that it expects them to treat customers fairly.

SHAME OF INSURANCE GIANTS The Mail, May 8, 2017