Insurers should come clean about rising costs

The Financial Conduct Authorirty is examining ways to ensure loyal customers don't get ripped off by insurers

Motor cover is expensive enough with insurers ripping us off (Charles McQuillan/Getty Images)

There’s been some potential good news for drivers and householders: the City watchdog is going to force insurers to tell us what last year’s premiums were, which means they will no longer be able to slip through their sneaky price increases on those of us who are stupid enough to remain loyal to the same insurer year after year.

The problem is that those who do remain loyal end up paying higher prices. Rather than offering us a competitive new rate when the time comes to renew our policy, insurers rely on our trusting nature to simply add 10 per cent or so in the knowledge that we’re likely to sign up again as it’s so convenient.

But millions of people who do that every year end up paying over the odds for motor or home insurance because they don’t take the trouble to shop around and find the best deal.

“The common practice of luring customers in with attractive initial premiums and then hiking the prices in subsequent years is not in the consumer’s best interests,” pointed out Simon McCulloch of Comparethemarket.

Christopher Woolard, director of strategy and competition at the Financial Conduct Authority, said: “We hope the proposals encourage more people to shop around for the best product for them. It is important that insurers give their customers the information they need to do this and ensure they’re treating their customers fairly.”

Which? campaigned for the move last year and executive director Richard Lloyd, said:​ “This simple change should help people save money by prompting them to shop around or haggle for a better deal with their current insurer.”

I agree that insurers should be forced to tell us not how much our policy cost last year. But they must be made to make it absolutely clear in a prominent message that consumers will find difficult to miss. On top of that they should be forced to tell us how much it has been increased by, and why. For too long, they’ve been allowed to rely on consumer trust and apathy to rip us off.