416pc... Where do YOU rank in the PREMIUM LEAGUE of insurance price hikes?
As hundreds of readers tell us of rises of up to
THE country’s Premier League is awash with money, as evidenced by the £815 million spending frenzy on new football players during last month’s transfer window. But today, Money Mail produces its own version of the Premier League — the Premium League, a table that should embarrass some of the country’s largest insurance companies and fuel the view that these businesses are using the inflationary backdrop to jack up premiums by obscene amounts.
In Money Mail plain speak, they are profiteering at the expense of customers who are already struggling with soaring energy bills and ever-higher food costs.
Our table comprises 20 of the biggest premium increases that car owners and households have been asked to pay when their motor and household insurance came up for renewal in the past couple of months. Our league is 20-strong because that is how many football teams make up the Premier League.
The table has been constructed on the back of correspondence sent in by hundreds of readers who have responded to our coverage on rising insurance costs.
Most of the greatest premium increases have been asked of elderly people, some of whom don’t have access to the internet, which would enable them to shop around for cover.
Although a handful of insurance customers have admittedly seen their premiums fall at renewal, the vast majority have been asked to pay between 40 and 50 pc more than last year. These figures indicate that motor and home premiums are rising faster than forecasters had predicted.
For example, research conducted late last year by management consultancy EY suggested that motor and home premiums would increase this year by an average of
15 and 30 pc respectively. These figures now look on the low side, although it could be argued that our analysis is skewed by the fact unhappy customers are more likely to contact Money Mail.
Tellingly, our mailbag supports EY’s view that premium inflation is most prevalent in the home insurance market — a result of rising subsidence claims caused by last year’s hot summer.
As our table highlights, some policyholders have been quoted renewal premiums three times higher than a year ago.
In all 20 cases, Money Mail has been told by customers that the hikes are not a result of a recent claim. Indeed, if the renewal premium increases asked of customers who have claimed in the past year were included, the resulting table would be more
Super Premium than Premium. For example, two readers — 85- year- old Rita Parker, from Sidcup in Kent, and Alan Paice, from Marham, Norfolk — were hit with respective renewal premium increases on their home cover of 314 and 215 pc after losing their hearing aids. These increases would have placed them in the top five of our Premium League.
‘Last year, I paid an additional premium for my hearing aids, which took the cost of my cover with RIAS to just under £242,’ says Rita. ‘When I lost one of them after staying at my daughter’s following surgery, I made a claim for £1,973, which was met. My reward? A renewal premium of £1,001. When I queried the increase, RIAS didn’t give me an explanation. Twenty years of loyalty to the insurer and I’m rewarded with an increase of 314 pc.’
Rita has now switched to Saga, and paid £467 for her cover.
In most instances — though not all — those stung with Premium League increases have successfully shopped around for more competitive cover.
This reconfirms our message last month that when it comes to buying cover, it always pays to shop around rather than staying loyal to one insurance company.
This advice is despite rules, introduced at the beginning of last year by the country’s financial regulator, designed to ensure loyal customers don’t pay higher premiums than someone buying identical cover from the same insurer.
Although the Financial Conduct Authority promised that ending the loyalty penalty would save longstanding customers £4.2 billion in premiums over the next ten years, shopping around — rather than staying put — is still the best way to shave pounds off premiums.
Understandably, some of the
people asked to pay threefigure increases are furious. None more so than Michael Herson, from Middlesex, who received a renewal notice for his home cover from Saga stating the premium would be jumping from £715 to £3,688 — an astonishing increase of 416 pc. He has had his Saga insurance for 19 years.
‘I’ve lived in the same house for 24 years, my details have remained the same and I have five years’ no claims,’ he says.
Despite protracted correspondence with Saga, the insurer has not budged.
Michael says the only explanations he can think of for the increase are a subsidence claim that he made more than 12 years ago (which affected only the garage) — and the insurer’s wish to ‘shed legacy customers’. He is now looking for alternative cover, and has received quotes which are half Saga’s renewal demand. Pauline Davidson — like many in the table — has managed to avoid a big renewal hike by shopping around.
Last year, she paid £223 to Performance Direct for annual cover on her Jeep Patriot. This year, they wanted £592 — a 165 pc increase.
Pauline, an 82-year-old retired teacher from Maidenhead, Berkshire, says: ‘I drive fewer than 5,000 miles a year. I have never had an accident — or made a claim. But when I challenged Performance Direct on the hike, it refused to back down.’
She has looked at other options via a price comparison website and moved to Swiftcover for £328. The last word goes to Maura Evans, a 67year- old retired college lecturer from Cheltenham. The renewal premium for her home cover with Saga came in at £782, an increase of 194 pc on the year before.
‘What sort of insurance market thinks it is fine to demand such increases of customers,’ she says. ‘I have never made a claim in more than 30 years.
‘I thought the City regulator had acted to stop the rip-off tactics of insurance companies — not aggravate them.’
Well said. This is a Premium League table that shames the insurance industry.
Yesterday, both Ageas (which owns RIAS) and Saga blamed higher premiums on rising costs of claims.