Those are the letters that arrive telling you that your home, car, travel, pet, or whatever, insurance is coming up for renewal.
And there’s no need to do anything.
Usually, the company adds that they’ve hunted round and come up with the ‘right’ or ‘best’ policy for you, in their view.
What it won’t say is the ‘cheapest policy’.
All you have to do, they’ll tell you, to maintain ‘great’ cover … is precisely nothing. And that’s just how you get taken to the cleaners.
Because, unless you get on the phone and ask, or you dig out last year’s policy docs, you have no way of knowing what you paid the year before.
So you have no idea how much your premium is going up by.
And, even more importantly, if you don’t check the market via a comparison site, you have no way of knowing whether the price you’re being offered is anything like the best.
Insurance companies love this.
They love it even more if you auto-renew out of a sense of loyalty – because that way they can really jack up the price and fleece you. While all the time you believe they’re doing right by you.
Recent research, for example, shows people who auto-renew on car insurance pay up to 20% more than motorists who shop around.
It’s a mug’s game. And we’ve argued endlessly for a change in the rules that have put the customer at a huge disadvantage.
Finally, the Financial Conduct Authority has acted and there will be big changes from April 1.
If things work out as they should, we, the customers, will at long-last have the upper hand. Those who are really up in arms about the changes are insurance brokers, because comparison sites mean you can easily just do away with a broker and find the best deal for yourself.
The last thing a broker wants is to remind you of this!
But the new rules mean that insurance companies AND brokers have to remind you it’s a good idea to do some comparisons on price when they send you a renewal quote.
The whole point of the new FCA rules is to get many more people to shop around at renewal time, whatever kind of insurance they’re buying.
1) Last year’s premiumClearly state last year’s premium, so it can be compared with the new one being asked for.
We suggest you check how much it’s gone up as a percentage rather than just the amount. You may get quite a shock.
And you’ll have more ammo to phone them up and ask them why.
2) Encourage you to shop aroundEncourage you to check your cover and to shop around for the best renewal deal.
Companies can word this as they wish, but it should ask you to check you have the right kind of cover and whether you’ve checked for the best price
In other words, don’t just take anyone’s word that what you’re being offered is a good deal. Check for yourself using a comparison tool.
3) Identify repeat renewal customersIdentify customers who have renewed four or more times with the same company and encourage them to shop around using a set message the FCA has come up with.
(This applies to anyone who’s renewed four or more times even if some renewals were BEFORE the new rules take effect on April 1).
And in the case of four renewals, the customer’s letter or email has to state: “You have been with us a number of years. You may be able to get the insurance cover you want at a better price if you shop around.”
Insurers must make all the above clear and easy to understand and they have to ensure you receive renewal information “in good time” to allow you to make comparisons and switch.
The FCA says insurers have to do it:
1) clearly and accurately;
2) in writing and …
3) in a way that is accessible and which draws the consumer’s attention to it as key information.
In other words, if they bury it in the T&Cs, they’ll be in breach of the FCA rules.
End of the line for brokers?Many in the insurance industry, especially brokers, have complained all this puts too much of an admin burden on insurers and brokers.
But the real reason they object is that more people going to comparison sites at insurance renewal time means fewer people are going to be paying rip-off charges.
Insurers are going to have to get more competitive.
The broking industry has said the focus is too much on price alone and brokers offer so much more.
You can make your own mind up about that one!
If you want to pay more than you need to, be our guest.
Watch out!Be careful, though. While the new rules are welcome there are still some pitfalls.
Hidden chargesEven if you do decide to renew, you still have 14 days to change your mind if you realise the policy is too expensive, or just not right for you.
But BEWARE! You can still be charged, not only for the time you’ve had cover during those 14 days, but you can also be hit with an admin fee on top.
So, it’s not really a free 14-day cooling off period at all.
Sneaky brokersThe new rules apply to insurance brokers as well as insurance companies.
But brokers are allowed to add to the reminder to shop around that they’ve already done some of this shopping around on your behalf. Direct insurers won’t be able to do that.
But, don’t be fooled – if you want to check you’re being offered the best prices on the market, you should always use a comparison tool.
Article is care of @spokesmansaid and can be found here
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