Insurers Are Next Against the Wall in Annual Contract Price Hike Wars

By Gary Cutlack on at

The Financial Conduct Authority has picked itself a nice easy target to batter, and is peering at the methods of the insurance industry to see how car and home insurers can be made to play a bit nicer when it comes to automatically renewing policies.

Of course at the moment what happens is that when your car insurance runs out and you ignore the boring letters about it, the insurer gets out a machine that picks a random number higher than the fee you currently pay and makes that your new fee. Only if you go through the masquerade ritual of pretending to cancel and carrying out the old comparison service trawl, do you then somehow magically find there's actually a cheaper option available near last year's price.

The FCA would like to end this boring annual fight against being ripped off, because it says that around six million UK policyholders are on the random number deals that would be cheaper if they shopped around or even just pretended to shop around and asked; and that such loyal customers, whether loyal on purpose or through lethargy, are being unfairly treated. Oh and firms are guilty of trying to "raise barriers to switching" as well.

Hence the FCA is looking to perhaps require insurers to move customers to cheaper deals once their current contracts end, or even banning altogether the raising of prices for those who renew annually. [FCA]