I called on insurers to stop ripping-off Ealing, Southall drivers by £1.4 million
- Research shows insurers are automatically renewing policies of thousands of drivers in Ealing, Southall
- Ealing, Southall drivers could save £1.4 million by not being auto-renewed
With the Financial Conduct Authority set to report within weeks on the use of auto-renewals in the motor insurance market, Virendra Sharma MP is taking action to save Ealing, Southall drivers £1,400,249 1 on their car insurance.
Research by price comparison website MoneySuperMarket found auto-renewal of car insurance policies is costing UK drivers £1.3 billion2, and that practices used by many insurers make it harder for consumers to get a better deal. Virendra Sharma MP is calling on the regulator to require insurers to clearly ask consumers whether they want to opt-in to auto-renewal when they first buy their policy.
MoneySuperMarket’s report shines a light on the poor practices of insurers, revealing that people often have no idea that they’re agreeing to auto-renewal when they first buy their policy, and would have no way of opting out even if they did. When renewal time arrives, the letter or email they get from their insurer can be confusing and misleading, and even conceal significant changes to their policy.
Cancelling an auto-renewed policy can be difficult and costly, with some providers charging cancellation fees or driving customers to expensive premium rate telephone numbers. Most insurers do not provide an online cancellation process, despite allowing customers to buy their policies online in the first place.
62 per cent3 of consumers say auto-renewals deter them from shopping around for a more affordable policy. And almost six million drivers (23 per cent)4 automatically renewed their car insurance with their existing provider when their policy was last up for renewal, without checking a single other quote.
Virendra Sharma MP is calling on the Financial Conduct Authority to take decisive action to stop the auto-renewal rip-off.
“It’s unacceptable that drivers in Ealing, Southall are losing £1.4 million because of unfair practices by the insurance industry. This is money that many can’t afford to waste. The regulator must take decisive action to put drivers back in control of their insurance. People shouldn’t have payments taken automatically from their accounts unless they have given their explicit consent. Insurers need to do more to ensure it doesn’t happen”.
Virendra Sharma MP
Dan Plant, Editor-in-Chief at MoneySuperMarket, said:
“As our report lays bare, auto-renewal is far from fair, it reduces proper competition and ultimately costs consumers big money. Our Eight Point Plan shows how insurers can make the auto-renewal process fairer and clearer, helping customers to save money, and we urge the FCA to take action to fix the market. Simple changes such as writing renewal notices in plain English, asking consumers to explicitly opt-in to auto-renewal when they buy their policy, and providing a click-through cancellation button on renewal emails will help drivers to make sure they are not paying more than they need to.”
Eight Point Plan
Auto-renewal can be an important safety net so drivers do not find themselves uninsured. To address the current failings in the auto-renewal process, and to tilt the balance of fairness back towards the consumer, MoneySuperMarket is challenging the insurance industry to adopt eight simple best practice recommendations:
- Consumers should be clearly asked whether they want to opt-in to auto-renewal when first buying their policy;
- Cancelling auto-renewal should be really simple when people receive their renewal notice. Such as a click-through button on emails or a simple cancellation form sent with the letter;
- Last year’s policy price should be displayed clearly on renewal notices, next to the new price;
- Any significant changes to policies – such as the imposition of a larger excess or removal of breakdown cover – should be clearly displayed on renewal notices;
- Renewal quotes should clearly include proof of any No Claims Bonus, to enable easy switching to alternative policies;
- Renewal notices should prominently warn customers that they must inform insurers of any changes in their circumstances, such as a new address, change in job, annual mileage or points on their licence;
- Renewal notices should be in plain English;
- People must be prominently told about the cooling off period, during which it should be free to cancel.
* The full MoneySuperMarket Auto-Renewals report can be downloaded here.
1 Calculated by taking the overall £1.3bn estimated consumer detriment and apportioning it using the number of privately registered cars in each constituency.
2 Number of Insured Driver/Vehicles: 26,000,000
26.6% have been with insurer 3 or more years (6,916,000) @ average saving of £122
42.9% have been with insurer 2 to 3 year (4,238,000) @ average saving of £113
Total saving £1,322,646,000
3 YouGov survey of 1,262 adults from across Great Britain who are responsible for arranging and managing their motor insurance, December 2014
4 There were 35 million vehicles licensed for use on the roads in Great Britain on 30 June 2013. Of these vehicles, 29.1 million were cars, 26m privately owned. Vehicle Licensing Statistics, Great Britain: Quarter 2 2013 (Apr – Jun) Dept for Transport. 23 per cent auto renewed last year x 26,000,000 = 5,980,000