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Car, home insurance, it pays to shop around

View profile for Kate Sweeney
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The BBC has reported how the city regulator has launched an investigation into insurance companies for overcharging customers when they renew their house and car policies.

The Financial Conduct Authority (FCA) says that automatic renewal can lead to customers being treated unfairly. BBC Radio 4's Money Box revealed in March that loyal customers often pay much more than new ones for insurance. The insurance industry says consumers can shop around for the best prices in a competitive market.

But many customers use automatic renewal for home and car cover - with the premium often increasing every year.

One 83-year-old Money Box listener saw the cost of her home insurance rise to £850, when a similar policy was available to new customers for £200.

Chairman of the Commons Treasury Committee Andrew Tyrie wrote to the FCA's new chief executive Martin Wheatley and the director general of the Association of British Insurers Otto Thoresen following the Money Box report in March. In his letter, Mr Tyrie raised concerns that older people in particular could suffer because they are less likely to shop around for the best deals using the internet.

I agree that the industry should be investigated on this issue as my mother remained with the same car insurer for a number of years, steadily seeing premium renewal prices increase until I did an online quote on a comparison site and my mother saved approximately £150 by switching to another insurance provider.

It is disappointing that showing loyalty to an insurance provider seemingly counts for very little in the current climate and often actually costs customers in the long run.

By Barry Sutton