Drivers want legal steps to be taken to put the brakes on rip-off car insurance renewal pricing.
According to the GoCompare Car Insurance study, 4.7 million drivers3 were caught out by the auto-renewal trap – where their insurer auto-renews their policy for another year if they haven’t checked for a better deal.
The practice costs motorists £1.2bn a year in higher premiums – a cost that has risen 22% in just six months.4 As a result, drivers are now demanding change with nearly three quarters (73%) wanting more information to help them make a more informed choice at renewal, and 55% wanting the practice of charging existing customers more made illegal.
On average, drivers have been with the same insurer for 2.6 years, while 13% haven’t changed providers for five years or more. While most companies offer loyalty rewards and discounts in return for continued custom, insurers typically reserve the best deals to attract new business.
GoCompare’s research found that only 54% of drivers are aware that they’d get a better deal as a new customer than if they renewed a policy.
While confidence in their ability to change provider prevents 11% of motorists from switching, paying premiums in monthly instalments also creates a huge barrier.
Monthly direct debit payers are 46% more likely to stay with their existing provider than drivers who pay for their cover in a single sum. This is particularly concerning because interest is added to monthly premiums so consumers who pay by instalments, and who are often those who need to keep costs down the most, always pay more than those who make a single payment (typically around 12% more)5.
Despite regulatory moves to increase transparency in the renewal process, most drivers are missing key information that should be contained in their renewal packs. Only 17% of drivers recalled seeing a statement in their renewal notice advising them to shop around for cover; just 34% said they saw the warning to check that the cover offered was still appropriate for their need, and only 43% saw the previous year’s premium alongside their renewal premium.
Most drivers say they want more renewal information. 32% would like more information through the post, 45% via email and nearly a fifth (19%) by text.
Almost half (47%) think that standard wording in plain English would ensure that renewal letters are consistent and easier to understand, and 40% think that customers should not be penalised for changing their minds after auto-renewing a policy.
Lee Griffin, the CEO and one of the founders of GoCompare, said, “You don’t really expect to hear 73% of people say “I want more information about my insurance policy”, but that is where we have got to now because this is such a big issue, for millions of drivers. Loyal customers deserve to be given clear information at renewal to help them decide whether to stick or switch.”