Our report published today

Transcription

Motor insurance
auto-renewals
The £1.3bn annual cost to UK drivers
February 25th 2015
Motor insurance auto-renewals
MoneySuperMarket
About MoneySuperMarket
MoneySuperMarket was set up to help consumers find the
best deal on household bills and that is still our mission
today. In 2013 we were used by over 27 million UK adults.
We provide a free, easy to use online service so they can
compare a wide range of products in one place and find the
product most suited to their needs. Our size means we are
able to offer our customers exclusive, market-leading deals,
including some they can’t even get direct from providers.
MoneySuperMarket
Foreword
Insurance is the classic ‘distress’ purchase. No one wants to buy it, but most of
us recognise that we need it – just in case. So we trust it to help us out when
required. And we trust insurance companies to play fair both when selling us a
policy, and when that policy comes up for renewal.
But as this report lays bare, the practice of automatically renewing car
insurance policies – known as auto-renewal – is far from fair and reduces
effective competition.
Often people have no idea that they’re agreeing to auto-renewal when they first
buy their insurance policy, and would have no way of opting out even if they
did. When renewal time comes around, the letter or email they get from their
insurer can be confusing and misleading, and even bury significant changes to
their policy in the small print. If you don’t want to renew your policy, cancelling
can prove difficult.
This might not matter if auto-renewing didn’t cost us, individually and as a
nation, so much. With an average saving of at least £113 if someone hasn’t
switched for a couple of years, most people are better off not letting their
insurance policy roll-over automatically. And the over-55s, those with less
money, and people not on the internet suffer more than most.
As a country, we spend over £1.3billion more than we need to just because
so many car insurance policies renew automatically – that’s money many can’t
afford to waste.
The insurance industry can be a force for good – employing thousands of
people across the country and coming to the rescue when the worst
has happened.
But when it comes to auto-renewal, it needs to rediscover its purpose, to
provide much-needed peace of mind to customers.
Our Eight Point Plan sets out how. It’s straightforward, simple, and fair.
I want to challenge the industry to adopt this plan and put itself back on the
side of its customers.
Peter Plumb
Chief Executive, MoneySuperMarket
MoneySuperMarket
Contents
Executive summary
01
An overview of auto-renewals
02
How auto-renewal is harming UK consumers
03
Recommendations: Our challenge to the motor industry
04
Conclusion
05
MoneySuperMarket
Executive Summary
• Almost a quarter (23%) of all UK motor insurance policies
are automatically renewed every year without consumers
checking a single other quote
This report provides an analysis of the widespread practice
• Drivers who allow their policies to be auto-renewed are
collectively over-paying on their motor insurance by
£1.3 billion every year
It is based on a review of insurance renewal notices issued
• Older people, those on low incomes and those who don’t
have internet access are most likely to be adversely
affected by auto-renewal
• MoneySuperMarket is challenging the insurance industry
to adopt eight simple best practice recommendations to
address the current failings in the auto-renewal process
of the UK motor insurance industry of automatically
renewing motor insurance policies at the end of their
annual term, commonly known as ‘auto-renewal’.
to UK consumers in 2014, quantitative and qualitative
Drivers who allow their
research carried out by Ipsos Mori and You Gov, and
policies to be auto-renewed
insurance site. All sources are referenced.
are collectively over-paying
anonymised data from MoneySuperMarket’s motor
The report finds that the use of auto-renewal does benefit
on their car insurance by
drivers by ensuring that they don’t end up accidentally
£1.3billion every year
meet the legal requirement, introduced in 2011, to be
uninsured when their existing policy expires and that they
insured at all times.
However, it also finds that, in many cases, drivers are not
aware that they are giving consent to be auto-renewed
when they first take out their policy, that renewal notices
are at best unclear, sometimes burying significant policy
changes in the small print, and that cancelling an
auto-renewed policy can be difficult and costly.
The findings raise questions over whether the widespread
practice of auto-renewal is the most effective way to ensure
motorists are not accidently left uninsured and whether
the insurance industry can adopt other practices to warn
customers of their obligation to be insured.
The scale of those adversely affected is sizeable. Almost
6 million policies - 23% of all UK motor insurance policies
- are now automatically renewed every year without
consumers checking a single other quote.
01
Motor
insurance auto-renewals
Auto-Renewal
Report 2015
MoneySuperMarket
Eight best practice recommendations
There is a financial cost to auto-renewal. Our research
of over 55s who did not change providers last time
shows that consumers who shop around instead of
their insurance came up for renewal had not changed
allowing their policies to be auto-renewed can make
providers for five or more years.
considerable savings. Drivers who allow their policies to
be auto-renewed are collectively over-paying on their
To address the current failings in the auto-renewal
car insurance by £1.3billion every year.
process, and to tilt the balance of fairness back towards
1
2
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 to do when people receive their
renewal notice. Such as a click-through button on emails or a simple cancellation form
sent with the letter
the consumer, the report challenges the insurance
Consumer research for this report found that a large
industry to adopt eight simple best
numbers of drivers have concerns about auto-renewal.
practice recommendations.
3
Last year’s policy price should be displayed clearly on your renewal notice,
next to the new price
In a poll conducted by YouGov, over two-thirds (68%) of
consumers said that they see auto-renewals as a bad
These eight recommendations, would remove some
thing because customers can be locked into a policy for
of the most negative impacts of auto-renewal in
another year without giving explicit consent, while 62%
the motor insurance industry, turning auto-renewal
felt auto-renewals deterred consumers from shopping
back into a benefit for consumers. We want to put
around for a cheaper quote.
consumers back in control of their insurance cover and
4
5
renewal means that they have paid for two insurance
from their bank or credit account.
6
Renewal quotes should clearly include proof of any No Claims Bonus, to enable
easy switching to alternative policies
Renewal notices should prominently warn customers they must inform their insurer
of any changes in their circumstances, such as a new address, change in job, annual
mileage or points on their licence
policies, having bought a new policy without realising
their existing policy had been auto-renewed.
removal of breakdown cover – should be clearly displayed on renewal notices
the insurance payments that are automatically taken
The research found that for some consumers, auto-
Any significant changes to policies – such as the imposition of a larger excess or
7
Renewal notices should be in plain English
In other cases, a lack of clarity in auto-renewal notices
has meant that important changes in circumstances
– points on a licence or modifications to a vehicle, for
example – have not been reported to an insurer for
far longer than otherwise would have been the case,
leaving the policy holder under-insured or
even uninsured.
Further research by Ipsos Mori confirmed what has
been suspected for some time: groups such as older
people, those on low incomes and those who don’t
have internet access are most likely to be adversely
affected by auto-renewal. For example, over 55s are
significantly more likely than the younger age groups
to auto-renew for numerous consecutive years: 40%
8
People must be prominently told about the cooling off period, during which it should
be free to cancel
01
MoneySuperMarket
Overview of
auto-renewals
Background to auto-renewals
Continuous Payment Authorities (CPAs) are now used
Two years later, the complaints from consumers
in almost all motor insurance contracts. This allows
haven’t subsided. What is more, auto-renewal is
insurance companies to take money from a customer’s
increasingly being used for other insurance products
bank account to automatically renew a policy when
such as home and travel insurance. It seems that
it expires, without any further explicit agreement of
auto-renewal has gone beyond being a way for the
the customer. When consumers sign up for motor
insurance industry to fulfil its obligations to help ensure
insurance they are now no longer signing up to a year’s
vehicles are insured at all times, and has become a
cover, but rather for a rolling policy that will renew
widespread customer retention tool.
every year until the holder cancels.
This report is the first to look in depth at the use
The practice of auto-renewals does help ensure that
of auto-renewals in the motor insurance industry,
drivers don’t end up accidentally driving without
providing landmark analysis of the costs and problems
insurance and committing an offence . To address the
caused to consumers by the practice.
problem of uninsured drivers on the road, the Road
Safety Act 2006 introduced a new offence of being the
keeper of an uninsured vehicle: Continuous Insurance
Enforcement (CIE) came into force in 2011, requiring
every vehicle to be covered by a valid insurance
policy, unless it was subject to a Statutory Off Road
Notification (SORN).
But while automatically renewing customers is entirely
legal and can be helpful, the widespread use of the
practice has not come without controversy.
In 2012,BBC Radio 4’s Money Box programme began
to expose consumers’ concerns around the practice.
The BBC reported at the time that the Financial
Ombudsman Service had seen almost 400 complaints
over a six-month period in 2012. It brought to light
for the first time issues such as consumers finding it
difficult to cancel their policy, and unexpected fees
and charges.
02
MoneySuperMarket
0
The research
The report is built on consumer research around the
auto-renewals process. It highlights that the problems
auto-renewals cause are both serious and widespread, and
result in a range of consumer detriment issues.
10
Public concern about auto-renewals 1
68%
of consumers agreed that
auto-renewals are a bad thing as
consumers could be locked into a new
policy without giving explicit consent
02
20
To compile this report:
• We looked at motor insurance renewal notices issued to
policyholders in 2014 and spoke to consumers about
the issues they experience when faced by auto-renewal.
• Ipsos Mori conducted face to face interviews with 824
consumers responsible for purchasing motor insurance
across Great Britain, between 5- 22 December 2014.
67%
agreed that auto-renewals are a bad
thing as they could lead to consumers
ending up having to pay two policies at
the same time
Survey results are weighted to be representative of the
target population within Great Britain.
• YouGov surveyed a further 1,262 adults from across
Great Britain who are responsible for arranging and
managing their motor insurance. The survey was
conducted in December 2014.
62%
of consumers felt auto-renewals
deterred people from shopping
around for a more affordable policy
30
68
67
• We analysed real renewal quotes, tested purchase
journeys, and conducted mystery shopping of
cancellation processes.
62
40
60
• Finally, the research modelled the cost to consumers.
50
1
YouGov Omnibus Survey of 1262 UK adults in December 2014
MoneySuperMarket
How auto-renewal
is harming UK
consumers
The process of auto-renewal starts when a consumer
first purchases a motor insurance policy. This is when
consumers knowingly or unknowingly enter into a
Continuous Payment Authority, allowing the insurer to
auto-renew the policy and take payment directly from
the consumer’s bank account or credit card.
Entering into auto-renewal agreements
We reviewed the online customer journeys of a
selection of motor insurers to see when and how
2
consumers are informed by insurers that they are
signing-up to an indefinite agreement when they first
purchase their motor insurance. Our review looked at
the purchasing journey up to the point the customer
A year later, when the policy is about to expire, the
company must contact the consumer again, giving them
details of the terms of any renewed policy and the right
to cancel.
enters payment details.
Our analysis identified a range of practices adopted by
insurers to inform their customers that they are signing
up to an automatic renewal process, some more
transparent than others. Our review revealed:
Our research looked at both of these stages of this
‘customer journey’, when the policy is first purchased
and when a renewal notice is sent out.
An inconsistent approach to when and if customers are
informed the policy will be auto-renewed. Some insurers
were upfront about the process, others only informed
customers once they had completed the purchase.
No insurer enabled a customer to opt out of auto-renewal
at the point they first purchased their policy online.
Consumers must call the insurer directly often on premium
lines to opt-out of auto-renewal.
The payment method used also determines whether or not
the consumer has signed-up to auto-renewal:
- People paying by credit card and in particular with an
American Express card, may find they have not entered
into an auto-renewal agreement. But those purchasing the
same policy using their bank details may be signed-up to a
CPA which allows the insurer to auto-renew the policy.
- This lack of clarity and consistency in the way in which
insures apply CPAs for the same policy could
cause confusion.
2
The review included the five biggest insurers as identified by the OFT’s Private Motor Insurance Market Study in 2011 as well as a random
selection of smaller providers.
03
MoneySuperMarket
When are customers informed that their policy
will be automatically renewed after a year?
Are all customers treated the same
regardless of payment method?
Information3 about auto-renewal is easy to locate as part
of the customer journey as it is shown in the ‘check and
buy’ page
Yes
We were unable to immediately determine which payment
method would or wouldn’t enter the customer into a CPA
We were unable to see any information during the
purchasing journey for both Aviva and Quote Me Happy.
For Quote Me Happy we found details on page six of the
policy document4
Where customer selects a continuous payment method of
payment their policy will automatically be renewed
Can customers opt-in or opt-out of their policy
being auto-renewed at the end of the contract?
Customers must contact Admiral to opt out.
No option is given during purchase
A Freephone number is provided to opt-out.
We could not find an online opt-in or opt out option
When are customers informed that their policy
will be automatically renewed after a year?
This is not part of the customer journey. Policy documents
state policy will renew automatically
Consumers are informed during the purchasing journey
– in the penultimate step of the online customer journey
We were unable to see any information during the
customer journey
Are all customers treated the same
regardless of payment method?
Auto-renewal is unavailable to customers paying annually by
Switch or Maestro
Only applies to payments by Direct Debit, Visa, Visa Delta,
or MasterCard
Policy documents state the policy will only automatically renew
if customer has chosen a continuous payment option.
Customer must contact LV= before renewal date to continue
with insurance policy for other payment methods.
Customers must update their My AXA Account or e-mail/call
AXA to opt-out of auto renewal
We could not find an online opt-in or opt out option as part
of the customer journey. Customers can call to opt out of
automatic renewal
We could not find an online opt-in or opt out option as part
of the customer journey. Customer must contact LV= to
opt-in or out of auto renewal, depending on their
payment method
Can customers opt-in or opt-out of their policy
being auto-renewed at the end of the contract?
3, 4
Information was not provided as part of the customer
journey. Policy docs state Admiral will automatically renew
policy from customer’s card details held on file
Example in annex 1
We could not find an online opt-in or opt out option
during purchase
03
MoneySuperMarket
Clarity of auto-renewal notices
We found the process by which insurers implement the
automatic renewal of a policy at the end of the annual term
to be even more inconsistent than at purchasing stage and,
arguably, misleading.
We obtained and reviewed a selection of renewal5 notices
from across the market.
Our analysis found that renewal notices differed wildly in
terms of presentation style and in what information
they presented.
In some cases it was difficult to quickly compare the
renewal quote to the previous year – one insurer even
omitted the renewal quote in one renewal notice but
included it in another. Some insurers did not clearly identify
any changes to the policy such as an increase in excess. This
information may only be highlighted in the policy document
or the customer needs to login to their online account with
the insurer.
Some insurers did not clearly identify any changes to the
policy such as an increase in excess. This information may
only be highlighted in the policy document or the customer
needs to log-in to their online account with the insurer.
We noticed that some insurers use language that makes it
unclear that the notice is a renewal notice such as ‘Happy
anniversary’6 or ‘YOU DO NOT NEED TO DO ANYTHING’7.
Such language along with unclear signposting to the
cancellation process may be confusing for customers
and takes advantage of consumer inertia to the
consumer’s detriment.
Insurers do not include details of the customer’s No Claims
Bonus. This could act as a barrier to switching as consumers
fail to understand their right to transfer this bonus when
they switch provider.
Our findings raise concerns about whether the content
and design of renewal notices create a barrier to
switching. Consumers may find it easier to compare
prices and policies if points three, four, five and eight of
the Eight Point Plan were adopted. We have developed
an example renewal notice highlighting best practice8.
Insurers can tailor renewal notices for individual customers as we were only able to gather a random selection of notices; our findings only provide
a snapshot rather than a full market analysis. 6 Example from Quote Me Happy – see annex 2 for image. 7 Example from Insure Pink - see annex 2
for image. 8 See annex 4.
5
03
MoneySuperMarket
9
Is this year’s renewal price displayed?
Yes
Yes
Yes
Yes
Is last year’s renewal price displayed?
No
No
No
No
Key changes to the policy aren’t highlighted in the renewal
notice. Customers need to login to Admiral’s web portal to
view changes
New features are clearly highlighted,
although customers need to login to a
web portal on AXA’s site to view details
of all changes
Key changes to the policy aren’t
highlighted in the renewal notice
No but there is clear warning that
customer should inform the insurer
of any changes in their circumstances
No
Yes
No
No
Are key features and changes to the policy highlighted?
Provide proof of No Claims Discount?
11
10
Is this year’s renewal price displayed?
Yes
Yes
Yes
Yes
Is last year’s renewal price displayed?
No
No
No
We saw two separate Swiftcover12
auto-renewal notices sent within two
months. One of these displayed last
year’s price, whereas the other did not
Key changes to the policy aren’t highlighted in the
renewal notice
Key features of the policy are
highlighted on a details page overleaf.
A significant increase in excess was also
highlighted in this section, there was no
mention of this on the first page
No but there is a clear warning on
the second page that there are
some changes to the policy and
information about how to find
more detail
Very few key features and any policy
changes are clearly highlighted on
the notice
Yes, overleaf on the details page
No
Yes
Are key features and changes to the policy highlighted?
Provide proof of No Claims Discount?
No
9
AXA announced it will include the last year’s premiums in all renewal noticed on 12 February 2014. 10 Quote me Happy is part of Aviva Group. We
were unable to review a renewal notice from Aviva. 11 Swiftcover is part of AXA insurance. We reviewed the renewal notices separately as the notices
appeared to differ from the AXA notice. 12 See example in annex 2.
03
MoneySuperMarket
How straightforward is the cancellation process?
Customers who do shop around and wish to switch
provider may find the cancellation process difficult
Is the cancellation process
clearly signposted?
Details of how to cancel are included
towards the end of the renewal notice
Although there is a section entitled
‘Right to Cancel’, this only includes
details of the costs cancellation will
incur, rather than clear information
on how to actually cancel the policy
Is the number Freephone?
No, the number is 0844
There is no cancellation number
obviously displayed
There is no cancellation web link
obviously displayed
obviously displayed
None evident
AXA13 charge a £25 administration
fee as well as any credit card. For
cancellations made outside the 14 day
cooling off period, credit card fees and
a £52.50 cancellation fee will
be charged
to navigate.
There is an inconsistent approach to the cancellations
process with a large number of insurers failing to
display prominently a cancellation number or web link.
Can you cancel online?
Our review found that the process for people wishing
to cancel their policy is often unclear.
Are there any costs to cancel?
Although consumers can purchase a new insurance policy
online at any time of day, we found most insurers do not
provide an online cancellation process.
Most insurers do not provide a freephone number for
customers wishing to cancel and most customer service
contact centres only operate during office hours.
We even found examples of the customer being charged
for cancelling.
Our findings indicate that the cancellation process
14
Is the cancellation process
clearly signposted?
There aren’t clear details on the
cancellation process on either page
of the renewal notice, although a
number is listed, this is only in the
context of changing payment method
or adding new features to the policy
A cancellation number is given in the
penultimate line of the email
Is the number Freephone?
The number that is listed is Freephone,
although it isn’t clear whether
customers can also cancel on
this number
No
obviously displayed
obviously displayed
Yes, on the details page of the notice,
there is a notice that if you cancel
within 14 days there is a cancellation
fee, although the amount
isn’t specified13
None evident
presents another barrier to switching. We would ask
insurers to adopt points two, five and eight of our
Eight Point Plan to help improve the cancellation and
switching process for consumers.
Can you cancel online?
Are there any costs to cancel?
13
Example available in annex 3. 14 Example available in annex 3. 15 Swiftcover is part of AXA insurance. We reviewed the renewal notices separately as
the notices appeared to differ from the AXA notice.
03
MoneySuperMarket
Consumers are left over £1.3 billion out of pocket
It’s a big problem affecting 23% of drivers
Auto-renewal is a problem for many consumers, in part
Our consumer19 research shows that 23% of consumers
because of the financial cost to them.
allow their insurance policy to auto-renew without looking
at even a single alternative quote, equivalent to almost
We estimate that over £1.3 billion16 of savings could be
6 million policies across the UK.
made by UK consumers if they were to shop around rather
than allow their insurance to auto-renew.
Of the consumers we spoke to who did not change motor
insurance provider last time their policy came up for
Our data suggests that the average saving consumers could
renewal, 29% had not changed providers in five or more
make is £113 if they had been with their insurer for two to
years, greatly increasing the likely cost of auto-renewal for
three years. For each year that a consumer renews their
them. This group was also significantly less likely to have
policy with their existing provider, the size of the possible
checked their renewal price against the cost of last year’s
saving grows. For those who last switched provider three or
policy, or to have checked whether key features of their
more years ago can make an average saving is £122 , over
policy have changed, meaning that their insurance is likely
30%18 of the average cost of motor insurance in the final
to be more expensive than necessary and less suited to
quarter of 2014.
their needs than they think.
17
While all the evidence suggests that those consumers who
are prudent and actively shop around can make substantial
savings, it is clear from our research that auto-renewal
presents a significant barrier to many consumers taking
advantage of available savings on their motor insurance.
MoneySuperMarket analysis of renewal quotes. 18 ABI average motor insurance premium tracker – Q4 2014.
Ipsos Mori interviewed 824 people responsible for renewing private motor insurance in December 2014.
16, 17
19
03
MoneySuperMarket
Consumers are trapped in the wrong policy
People are paying twice
While nearly three-quarters of consumers check their
We found that over two thirds (67%)22 of people had
renewal quote against last year’s policy, we found that over
significant concerns over auto-renewals, on the basis that,
two-thirds (67%) do not check if the policy features have
if customers switch to a new supplier and forget to cancel
changed. One-fifth of consumers claimed to do neither of
their old policy, they may end up paying the cost of two
these things.
insurance policies.
Furthermore, without informing their insurer, 1%21 of
These concerns were borne out by our wider consumer
consumers have made changes to their vehicle, 2%
research: 6%23 of consumers who switched in the last four
experienced changes to their health, 3% received a driving
years said that at some point in their most recent switch
conviction, 3% experienced other changes in circumstances
they ended up paying for two motor insurance policies at
and 1% had one of these changes apply to a named driver
the same time. Not only would this leave the consumer out
other than themselves.
of pocket for the period of the overlap, it is likely that they
20
may have been charged a cancellation fee if the policy were
This means their insurance could have been compromised
cancelled after the statutory cooling off period.
and, at worst, rendered invalid.
There is also the potential problem of resolving which
While this is not caused by auto-renewal – these changes
insurer is liable for any claim made if the policyholder had
have happened during the term of existing insurance
two policies running concurrently.
policies – auto-renewal does mean that they are far
less likely to be picked up when the policy expires, thus
prolonging the period of under - or non-insurance.
20
Ipsos Mori interviewed 824 people responsible for renewing private motor insurance in December 2014. 21 YouGov Omnibus survey conducted in
December 2014. 22, 23 Ipsos Mori interviewed 824 people responsible for renewing private motor insurance in December 2014.
03
MoneySuperMarket
0
Older people are often
worst effected by auto-renewal
10
Our research found that the over 55s24 age group were
significantly more likely to auto-renew without checking
quotes than the other age groups. We found that:
Last time their motor insurance came up for renewal, nearly a
third (31%) of over-55s did not check any quotes and allowed
their existing provider to renew their policy, compared to only
11% of 17-34 year olds.
31%
Over 55 years old
17-34 year olds
20
11%
29
30
68
Of those over-55s who did not switch car insurers last time their
policy came up for renewal, 40% had not changed insurer for
five or more years, compared to only 12% of 17-34 year olds.
40%
17-34 year olds
Over 55 years old
17-34 year olds
12%
17-34 year olds
24
62
40
60
50
Three in ten (29%) people aged 55 or more did not check the
renewal quote against last year’s policy cost. In addition to this
over two-thirds (68%) did not check whether key features of
their product policy had changed before renewing their
motor insurance.
03
MoneySuperMarket
People without access to the
Internet are also hit hard
Those on low incomes are least likely to check
whether auto-renewed policies cover them26
Those who do not have access to the internet are also
27%
significantly more likely to auto-renew than those who
do have access. They are also more likely to be serial
40%
auto-renewers. We found that :
25
Last time their motor insurance came up for renewal,
39% of people without internet access did not check
any quotes and allowed their existing provider to
renew their policy, compared to 21% of those with
internet access.
Over £25,000
their insurance provider five or more years ago (60%
three or more years ago), compared to 28% with
internet access (40% three or more years ago).
Without Internet
21
%
With Internet
27%
37%
39%
Without Internet
not change insurer because it was too much hassle,
compared to only 10% with internet access.
Only 27% of people in DE class checked whether key features of the product policy
had changed before renewing their motor insurance, compared to 37% in AB class
34%
No Internet
Internet
Only 28% of people with no access to the internet checked whether key features
of the product policy had changed before renewing their motor insurance,
compared to 34% with internet access
28%
With Internet
17%
Without Internet
10%
With Internet
25, 26
DE class
AB class
36%
DE class
27%
17% of people without Internet access said they did
Only around a quarter (27%) of people earning under £25,000 checked whether key
features of the product policy had changed before renewing their motor insurance,
compared to 40% of those earning over £25,000
39%
28%
39% of people without Internet access last changed
Under £25,000
AB class
36% of DE class, compared, to 27% of AB class, last changed their insurance
provider five or more years ago
03
MoneySuperMarket
Recommendations:
Our challenge to
the motor industry
It is clear that the insurance industry must make voluntary
changes to put consumers back in control of auto-renewals,
otherwise the regulator or the Government will need to
take action.
These changes must make signing up to auto-renewal
a conscious choice, give consumers fair access to the
information they need to make an informed decision about
whether to allow auto-renewal, and make it easier to cancel
an unwanted insurance policy.
Working with consumers, we have developed an Eight Point
Plan that, if implemented by the insurance industry, would
address concerns with auto-renewal.
Eight Point Plan
1
Consumers should be clearly asked whether they want to opt-in to auto-renewal
when first buying the policy. The opt-in or opt-out option should be made available as
part of the online customer journey
2
Cancelling auto-renewal should be really simple to do when people receive their
renewal notice. Such as a click-through button on emails or a simple cancellation form
sent with the letter
3
Last year’s policy price should be displayed clearly on your renewal notice, next to
the new price. Not only is there an inconsistent approach between insurers we found
the same insurer may vary whether or not they state last year’s premium
4
Any significant changes to policies – such as larger excess or removal of breakdown
cover – should be clearly displayed on renewal notices. Changes to policy should be
presented clearly so consumers can make a like for like comparison
5
6
Renewal quotes should clearly include proof of any No Claims Bonus, to enable
easy switching to alternative policies
Renewal notices should prominently warn customers they must inform their
insurer of any changes in their circumstances, such as a new address, change in job,
annual mileage or points on their licence. Consumers should be prominently warned
that the insurer has assumed that there have been no changes in the customer’s
circumstances. Failing to inform the insurer of changes in circumstances could leave
the driver under insured or invalidate a policy
7
8
Renewal notices should be in plain English. Reassuring language used by some
insurers such as ‘Happy Anniversary’ can be confusing
People must be prominently told about the cooling off period, during which it
should be free to cancel
04
MoneySuperMarket
Conclusion
Auto-renewal should provide a benefit for consumers,
enabling an easy continuation of an existing policy where
the policyholder has actively decided that this is what they
want. It should also operate as a safety net for the small
number of consumers who, for whatever reason, might
otherwise forget or be unable to shop around to buy a new
policy when the current one expires.
However, the way that auto-renewal is implemented by
However, this needs to balance with the best interests
of consumers, and at the moment too many of them are
losing out. Almost 6 million people who could save over
£100 a year don’t even look at a single quote except their
renewal price, costing UK drivers £1.3 billion every year.
Our simple Eight Point Plan would redress the balance and
help align the renewal process with customers interests,
not simply serving insurers needs
The motor insurance industry must recognise that the
the insurance industry means that it is currently acting
against the best interests of many consumers, and costing
UK drivers over £1.3billion in additional premiums.
Unfortunately, this does not appear to be an accident,
with consumers opted-in to auto-renewal, often without
their knowledge, when they first buy their policy; unclear,
confusing and misleading renewal notices; and unclear
cancellation processes.
current situation is unacceptable and take action to reform
auto-renewal so that it acts in the interest of consumers
first and foremost.
Our simple, easily implementable Eight Point Plan would
transform auto-renewal. If implemented in full, this Plan
would address concerns and restore much of the trust that
consumers have lost in the renewal process. It would also
ensure that consumers are getting the most appropriate,
most tailored, and ultimately, the most cost effective, motor
insurance product available to them.
We urge the insurance industry to take action and
implement the plan. If not, we will look to the Government
and the regulator to ensure that it does.
The time has come.
05
MoneySuperMarket
Annex 1
Online customer journey
Allianz
Bell
Information on automatic renewal was very easy to locate in the Allianz process as it
was shown on the ‘check and buy’ page in the Payment Breakdown section. It included a
Freephone number to call to opt out of auto-renewal, although again this appeared to be a
separate process that the customer would have to go through after they had bought their
policy – there didn’t appear to be a way of opting out as you were purchasing the policy.
Notice of automatic renewal in Bell’s journey was not immediately obvious to us. We
eventually found details in page 24 of their policy document.
MoneySuperMarket
Directline – Churchill
Information on auto-renewals was on the ‘review and confirm’ page so was very easy to
spot. We were also able to have an online conversation with a Churchill advisor to confirm
their process.
However, there didn’t appear to be an option to purchase the policy without signing up
to auto-renewal. The advisor said that, once we’d purchased the policy, we’d need to get
back in touch to get the link to cancel the auto-renewal.
MoneySuperMarket
Annex 2
Renewal notices
Quote me Happy
Quote Me Happy
In contrast to Directline – Churchill, it wasn’t immediately clear to us in the purchase
journey that Quote Me Happy would automatically renew the policy. We eventually found
it in page six of the policy document. Moreover, within the process it also said ‘Where you
select or have selected a continuous premium payment method’, but didn’t explain clearly
what this meant or what to do if you didn’t want to sign up to auto-renewal.
Quote Me Happy’s auto-renewal notice was sent as a ‘Happy Anniversary’ notice, using
language that was heavily tilted towards renewal. They told us our premium was cheaper
than last year, but didn’t clearly display both figures against each other. Key feature changes
and details of any no claims bonus were not prominently displayed.
MoneySuperMarket
Swift Cover
The Post Office
We looked at two separate auto-renewal notices from Swift Cover. Rather remarkably,
despite being from the same insurer, there was a clear difference between the two. In
one Swift Cover displayed the customer’s new quote against last year’s quote, whereas
in another email to a different customer they failed to display the same information,
suggesting that this might only be displayed when the renewal quote is cheaper. At the
very bottom of the email there were details on how to cancel the policy.
The Post Office displayed this year’s quote, although it did not offer a comparison against
last year’s. The notice did clearly set out the details of cover, including the personal
circumstances on which the policy was based, allowing the customer to check that these
were still accurate. A telephone number to update details or cancel the policy was contained
in the very small print at the top of the notice.
Worryingly, we found that there was a substantial change to the excess included in this policy
and that these were only highlighted in the small print overleaf.
MoneySuperMarket
Insure Pink
Sheilas’ Wheels
Insure Pink’s auto-renewal email was reasonably clear, setting out that next year’s
insurance was an ‘offer’ rather than a given, and that the customer should check their
details carefully to ensure they hadn’t changed. Despite telling us they had found a ‘great
deal for our insurance this year’, they did not give us the figures to compare the quote to
last year’s price. There was no clear signposting on how to cancel, instead there was a very
prominent, and potentially misleading, ‘YOU DO NOT NEED TO DO A THING’, displayed in
the correspondence.
Sheilas’ Wheels had a clear number to call to cancel, although they didn’t display a new
quote, let alone give us a figure to compare from last year, on the main correspondence.
The language was also arguably intended to deter shopping around, stating “We’ll
automatically renew your policy for you” and “That’s it: there’s nothing else to do”.
MoneySuperMarket
Annex 3
Cancellation process
AXA Insurance
The Post Office
Moreover, the Post Office’s small print also seemed to include a cancellation fee,
although the language around this was very unclear.
MoneySuperMarket
Annex 4
Dear Peter,
Here’s our invitation to automatically renew your car insurance with us for another year. Remember, you
MUST have insurance for your car at all times, unless you apply for a Statutory Off Road Notification.
If you renew with us, your premium this year
£420.55
Last year, your insurance cost
£394.48
If you do nothing, we will automatically renew your policy on February 25, 2015
We can do this because, when you first took out insurance with us, you opted-in to our automatic renewal process.
We need to tell you about a number of changes to your policy
1. The excess on your policy (the amount you pay towards any claim you make) has increased from £100 to £150.
Doing this has allowed us to limit the increase in your premium.
2. You are no longer entitled to a courtesy car if your car is damaged and under repair.
Again, we have removed this benefit to reduce the premium increase.
Changes in your circumstances
Please let us know if your circumstances have changed over the past 12 months. A lot can happen in
year and we need to know so that the terms of your policy and premiums are correct. Changes that
could affect your agreement include:
• Marital status
• Modifications to your existing car
• Home address
• Driving convictions
• Employment status or job description
• Additional drivers
• Health issues or physical capability
If you have additional drivers on your policy and their circumstances have changed, you need to tell us
about that, too. Details of how to contact us are at the foot of this letter
Cancelling your policy
We hope you’re still happy to renew your policy with us. If you do wish to cancel, you have a statutory
14-day cooling off period from February 25, 2015 during which you can cancel your policy. There is no
cost to cancel.
Remember
it is a legal requirement to have insurance for your car at all times unless you have declared your car ‘off
road’ through a Statutory Off Road Notification.
To cancel, please click here and complete the form or complete the attached form and return by post
(postage required) We have attached proof of your no claims discount entitlement. You will need to
send this to your new insurer.
How to get in touch
If you have any questions regarding this letter or your car insurance generally,
please call us on 0800 123 456 or use our webchat facility at InsureSuperMarket.com
Yours sincerely,
Managing Director
InsureSuperMarket.com
© MoneySuperMarket.com Limited 2015
Telephone 01244 665700 Web www.moneysupermarket.com
Registered in England No. 3157344
Registered Office Moneysupermarket House, St. David’s Park, Ewloe, CH5 3UZ

Our report published today

Transcription

Similar documents

T-REX Manual - RC Helitechnics

COMMERCIAL BOOTHS

Hamilton Beach 936 3 Speed Milk Shake / Malt Mixer

Child Psychiatry Handouts

Q Series Brochure - International.indd

Installation of Robo-Focus Motor

our HAMMR brochure

XXLS eries... - Multee Proe India

Nanomotion Edge Brochure