Devastating dossier that reveals your home and car cover could DOUBLE this year – unless you demand a better deal

TODAY The Mail on Sunday raises the alarm over a potentially massive failure of regulation that could cost households hundreds of pounds a year. A growing dossier of evidence gathered by this newspaper indicates new rules introduced to protect loyal customers of insurance companies from being exploited are not working.

Since January 1, insurers have been banned from charging loyal customers more than new ones – a move that was supposed to save them more than £4billion over the next ten years. But we have become increasingly concerned that the regulator’s intervention in the market is not having the desired effect. Readers have inundated us with letters which appear to show they are being lulled into a false sense of security that they are being treated fairly – when in fact they are not.

At best, the rules are being bent and at worst broken. Insurers insist they are doing no wrong. Our analysis suggests many longstanding customers are not benefiting from the rule changes at all. Rather than saving money, many customers whose policies are due to renew in the coming weeks – a large number of whom are elderly – are being informed of huge increases in their car or home premiums. In some cases the costs are doubling. The reasons for the increases are not being given, leaving customers baffled and angry.

They are being assured they are getting the same deal as a new customer would get – a requirement under the new regulations. But The Mail on Sunday has now uncovered numerous cases where those who challenge their renewal premium are finding they are subsequently offered a much lower price.

Most worryingly, some customers have had their renewal premium reduced after finding a cheaper equivalent quote from their current insurer when posing as a new customer – something the rules are meant to eradicate. The first instance of this was revealed by The Mail on Sunday last week. But since then, more customers have come forward with the same experience. For example, one reader, who did not want to be named, says his car insurance with a well known bank was due to renew automatically next month with a premium increase of nearly 38 per cent.

But after using a comparison website and finding cover from the same bank at a premium lower than last year’s, he confronted the provider. It revised his renewal premium to below what he paid last year.

Another customer, Peter Fennell, from Fleet in Hampshire, was told by LV that his motor premium for the year ahead would be rising by nearly 25 per cent to just over £425. Unwilling to pay the new premium, the 82-year-old shopped around and found equivalent cover from Flow

Insurance for just £13 more than he had paid last year. Flow is a trademark of LV.

One explanation being provided by insurers is that customers who kick up a fuss are getting a revised renewal quotation based on lower prices the insurer has introduced since the original renewal notice was issued.

This is what LV says happened to a customer featured in last Sunday’s paper – Richard Ansell, when he challenged his car renewal premium of £450.13. LV said the rates it used for premium pricing had changed and as a result his existing cover would now attract a renewal premium of £313.53 – nearly 20 per cent lower than his 2021 cover. Since our story last week, LV has confirmed Richard NOT have got the lower renewal premium if he had failed to challenge them. This suggests many customers will unwittingly end up paying over the odds – despite the crackdown by the Financial Conduct Authority, the City regulator.

IN the event of pricing rate changes, LV said: ‘The renewal premiums for those customers who have received their renewal [letter] but have yet to renew don’t automatically change. It’s just not practical for customers [in the process of renewing] to be alerted every time pricing changes.’

Other insurance customers, however, have told The Mail on Sunday they have been sent notices saying their original renewal quote is no longer valid because prices have gone UP since it was issued. In other words, it appears practicality is not an issue if pricing rates rise after a renewal premium has been issued and before it has been accepted.

As we report in the box, right, both Jerry Sullivan and Susan Jepson have received higher revised renewal premiums from Hastings Direct, resulting in yearon-year price increases of 162 and 73 per cent.

A leading insurance expert, who does not want to be identified, says the results of this paper’s probe into the new pricing regime for motor and home insurance raise concerns that must be pursued by the Financial Conduct Authority. He says: ‘It cannot be right that only customers who chalwould

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lenge their original renewal price benefit from a lower premium in the event of repricing. It is also wrong that keener prices are only available for those who challenge.’

He adds: ‘It is at odds with the duty under the regulator’s new rules to offer ‘fair value’ to all policyholders, including vulnerable customers, who may not have the ability or knowledge to challenge an agent in an insurance call centre.’

The FCA confirmed insurers must offer products that represent ‘fair value’. It also said it was keeping a ‘very close eye’ on how the market develops and holding insurers ‘to account where they are not meeting [regulatory] requirements’. Insurance firms insist the regulator’s new rules are helping drive down premiums. One insurer says 60 per cent of its motor policyholders are benefiting from lower premiums while NFU Mutual says ‘a significant portion’ of customers are seeing price cuts.

All insurers contacted by The Mail on Sunday insist they are abiding by the rules. Hastings Direct said that while some customer prices were going up, ‘all renewal prices are the same or better than our new business prices’.

It added: ‘We always encourage customers to shop around at renewal and to make sure their personal information is up to date to ensure they are getting the best price for their circumstances.’

Aviva said: ‘The new regulations mean renewal prices will be the same, or lower than, the equivalent price for a new customer on a likefor-like basis.’

LV said: ‘We are complying fully with the FCA rules. None of our customers renewing from the start of the year are paying more than a new car or home customer buying a like-for-like policy on the same day their renewal is generated – and through the same channel as the original policy.’

In the case of Peter Fennell, it said the difference in price quotes between LV and sister brand Flow reflected the fact ‘that the brands target different customers and the views from a risk perspective are also different’.