Â£2.37bn overspend on insurance to continue
More than eight million drivers will continue to collectively overspend Â£2.37bn on premiums in the next 12 months, according to MoneySuperMarket.com.
And the price comparison site believes new rules from the Financial Conduct Authority (FCA) - designed to encourage shopping around for premiums - don’t go far enough.
From April 1 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. There will also be messaging about searching for a cheaper deal with another provider.
Currently more than half of the UK’s drivers auto-renew with their existing provider. And the research shows this number will remain stubbornly high when the new rules comes into effect on Saturday.
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 to £70 to annual premiums.”