Despite new rules from the Financial Conduct Authority (FCA) coming into force next week, new research from MoneySuperMarket can today reveal over eight million drivers will continue to overspend by £2.37bn in the next 12 months by automatically renewing their car insurance.
- Over 8 million drivers will overspend £2.37bn collectively on premiums in the next 12 months
- From 1st April 2017, insurers will be forced to include last year’s policy details on renewal letters
- Drivers who shop around at renewal could save up to £275
Despite new rules from the Financial Conduct Authority (FCA) coming into force next week, new research from MoneySuperMarket can today reveal over eight million drivers will continue to overspend by £2.37bn1 in the next 12 months by automatically renewing their car insurance.
From 1st April, insurance companies will be obliged to inform policyholders of last year’s premium when issuing their new quote on renewal documentation, highlighting any price increase alongside messaging about the benefits of shopping around for a cheaper deal with another provider.
Currently more than half of the UK’s drivers (53 per cent) auto-renew with their existing provider and MoneySuperMarket research shows this number will remain stubbornly high when next week’s ruling comes into effect, with 41 per cent who auto-renewed last time again sticking with their current provider at the point they receive their renewal letter. A third (33 per cent) also admitted that, without a reminder about the previous year’s costs, they wouldn’t know by how much their premium was increasing.
Top reasons why policyholders auto-renewed rather than change providers:
- Three in ten (30 per cent) were happy with the cost of their insurance
- 28 per cent shopped around and couldn’t find a better deal
- A fifth (20 per cent) had a separate quote matched by their insurer
- Almost a fifth (18 per cent) liked the customer service offered by their current provider
Kevin Pratt, consumer affairs expert at MoneySuperMarket, said: “It’s blindingly obvious that the new FCA rules are not stringent enough to create a switch-and-save culture. The majority of drivers (63 per cent) chose their insurer because it offered the cheapest deal at the time but, when it comes to renewal, 11 per cent don’t even check the new cost of their policy.
“A huge number of motorists will continue to auto-renew even after the FCA’s ruling comes into effect and pay more than they need to. Until and unless switching becomes a habit, providers will remain unmotivated to offer the most competitive rates to loyal customers. Shopping around is the best way to find the most competitive price and that can mean a difference of up to £275 every year.
“There are massive upward pressures on car insurance premiums. We already know about the 20% increase in insurance premium tax in June and insurers are also suggesting that reforms to the way personal injury pay-outs are calculated will add a further £50-£70 to annual premiums. That makes it more important than ever to be proactive about securing the best deal possible.”