LEE BOYCE: The insurance loyalty penalty strikes again

LEE BOYCE: Why can’t our financial watchdog protect loyal customers from sneaky auto-renewal insurance hikes?

We will collectively save you billions of pounds by banning the insurance loyalty penalty. That was the rallying cry last January from the City watchdog.

No more sneaky insurers auto-renewing customers onto higher premiums for a like-for-like policy to boost the coffers, while offering cheaper deals for new customers. Fast forward to January 2023, and those words are starting to ring hollow.

Take my car insurance quote. Mrs B and I drive a Skoda Karoq. We bought it brand new in January 2019 and insured it through Diamond.

Empty promises: Last January, the City watchdog pledged to protect loyal insurance customers from sneaky auto-renewal price hikes 

Mrs B is the main driver and chose Diamond when we purchased the car as it offered one of the cheapest quotes.

She had previously been a customer for more than a decade with another vehicle. When we bought the car, the annual insurance was £396.48. A year later, after the usual haggle where we threaten to leave, the price fell by 8.2 per cent to £363.59.

In January 2021 it rose to £400.15 and in January 2022 it hit £406.97. Because these quotes were in the rough ballpark figure of what we paid originally, we stuck with Diamond.

With our car insurance set to expire next week, we received our annual ‘auto-renewal, you don’t have to do anything’ email.

Except, there was devil in the detail — the quote had gone up a whopping 21 per cent to £492.54. This is easily the biggest auto-renewal quote we’d ever received for any vehicle in any year.

We phoned Diamond on Saturday. I came away livid. We were given a wishy-washy explanation — something about our postcode — before the call-centre staff member put us on hold.

We were eventually told the best he could do was £453.55 — £38.99 less but still more than last year. When I mentioned we planned on shopping around, the quote suddenly fell by £10 to £443.55.

That, I was told, was as low as he could go. Still almost 10 per cent more than last year, despite more miles on the clock, a car presumably worth less, ten years of no claims bonuses, and above all, the ‘L’ word: Loyalty.

On a comparison website, the lowest price from a rival insurer we recognised — Churchill — came out at £343.13, or £100 cheaper.

Mrs B phoned Diamond again on Monday but it would not budge. For the first time, there was no room for hard negotiation. As Jeff Prestridge reports on our cover it’s the first time we’re hearing it from readers, too.

The Financial Conduct Authority is supposed to protect loyal customers. If people are being whacked with huge auto-renewal hikes, something is very wrong. It is time for the FCA to urgently investigate what’s going on.

Diesel gap

Sticking with motoring — why are diesel prices so stubbornly high? The gap between unleaded and diesel is so vast that even I’m noticing it — and we don’t drive a diesel. At our local BP garage, there’s a 25p-a-litre difference.

Everywhere I drive, it’s a similar picture. Over the past two decades diesel has typically been 5p more per litre than petrol. 

That has now increased five-fold. It’s bad news for diesel motorists, but especially for businesses, many of which rely on ‘workhorse’ diesel commercial vehicles.

Now a cynic could argue that it’s all part of the demonisation of diesel — keep prices high to put people off owning a diesel car.

If it’s not that, then petrol retailers seem to be simply punishing diesel owners to boost profits.

O2 fury

Having a fraudulent phone contract opened in your name at O2 is frustrating enough. 

But having numerous contracts taken out and then, after reporting it, for the ‘debt’ to be sold to debt collectors, is outrageous.

The final insult? The £30 compensation offered to victims after all the threatening letters and someone running up debt in their name. O2 should be sticking a 0 to the end of that ‘offer’ — and getting a grip on this farce now.


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