Motorists could be overpaying for car insurance by £1bn - February 2009

This regularly updated section of the HomeApproved web site will cover the latest trends, research, opinion and developments in the UK car insurance sector.

Motorists could be overpaying for car insurance by £1bn
Five million UK motorists could overpay for their car insurance this year by as much as £1bn and will have no idea how much they could be saving, according to new research from Gocompare.com.

The research, commissioned to mark one of the busiest times of the year for car insurance renewals, found that 19% of drivers simply read and file their insurer’s renewal quote without comparing it against any competitors, either by phone, on the internet or by using a broker. This could lead to them spending a massive £1bn more for their insurance this year than they need to, according to Gocompare.

With 48% of drivers either dreading receiving their renewal quote or fearing that it will have increased, not comparing your renewal quote could be a very costly mistake which plays right into the hands of insurers. While 69% of drivers agree that insurers give a better deal to new customers rather than those who renew, 27% say they don’t compare their renewal quote because their insurer was cheapest last year so they will be the cheapest again this year.

Hayley Parsons, CEO of Gocompare said: "Our experience shows that insurers almost always offer more attractive quotes to new customers than they do to their existing clients and it is encouraging to see this message is gradually getting through. However, hundreds of thousands of motorists still mistakenly believe that because their insurer gave them a great deal in the past they are bound to still be competitive now. The idea that one insurer will remain the most competitive from one year to the next or that customers will be rewarded for their loyalty couldn’t be further from the truth."

When consumers were asked what annual saving would tempt them to switch to another insurance company, 27% said they would switch if they could make any saving at all and this increased to 81% of respondents who would switch if they could save up to £75 per annum. The research also revealed that motorists were concerned about some of the tactics used by insurers to get them to stay when their insurance came up for renewal. 17% felt under pressure to renew their insurance when they got their renewal forms through and 43% agreed that insurers could make it clearer how much their renewal premium had increased compared to last year.

Ms Parsons continued: "Very few renewal notices show what you paid for your insurance last year because your new premium may have gone up. Insurers don’t want to spell this out for you in black and white in case the increase prompts you to compare your renewal quote against their competitors.

"However, this is exactly what you should do because expensive renewal quotes have no place to hide on a comparison site. At the very least, shopping around will enable you to see how your renewal quote compares with a much wider range of policies."

ENDS

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