Many in the insurance industry feel that motor insurers are now delivering value, rather than just selling car insurance on price. There seems to be little evidence that existing customers are facing a 100% rise in premiums compared to new customers either, except for one article 4 days ago in the Guardian, which provided no hard evidence, just one anecdote.
Here’s another view from GlobalData;
Following the news that loyal motor insurance customers face premiums that are double that of new customers, despite FCA reforms, Ben Carey-Evans, Senior Insurance Analyst at GlobalData, a leading data and analytics company, offers his view:
“This news isn’t particularly surprising, as the motor market is so competitive and attracting new business is extremely dependent on value. The prominence of price comparison sites, and consumers being extremely likely to select the cheapest policy from the first page, means it is difficult for insurers to make profit on new business.
“However, this will be disappointing for the FCA. Its reforms came into force in January 2022 and were intended to stop customers who renew their policies facing punishments for loyalty.
GlobalData’s 2021 UK Insurance Consumer Survey found that that up to 65.6% of people in the UK still do this. Out of this 65.6%, 41.6% shopped around, but ultimately renewed with the same insurer, and 24% just renewed. A sizeable proportion of consumers are facing higher premiums than they should so it is advisable to at least check for other price options at renewal, especially given the cost-of-living crisis we are in at the moment.”
Here are some facts which my cause a rise in car insurance for an existing customer.
1. Your old car is now worth another 3K more than last year.
2. You are out of lockdown and back up to 12K miles per year, not 6K.
3. You would now like EU cover plus breakdown as travel via ferry is possible.
4. Your area is suffering catalyser theft, vandalism or pro theft gangs operating.
Hard evidence that IDENTICAL car policies and IDENTICAL driver profiles are costing 100% more than a quote for a new customer with exactly the same criteria needs to be found to back up such claims.
Insurtech now allows underwriters to personalise risk and cover, so comparing a 45 year old, no points, driver doing 5k miles, with a neighbour who covers 15K and has a named driver, a recent 3 points speeding, plus EU cover, plus legal, isn’t really valid.
It is, to quote the FCA, misleading the customer.