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Monday, 19 April 2010

Burning Down the House

Today I renewed our home and contents insurance which runs out at the beginning of May. This process is part of the annual ritual that is the insurance renewal game.

Last year I was insured through Churchill (premium £270) and recently I received my renewal notification from them. All the great benefits of insuring with Churchill for only £330. On my reckoning that's a 22% increase. So it's onto Goggle, comparison web sites and filling in, yet again, the same old details. Except, this year was different.

In March I renewed my car insurance. I was insured with  SwiftCover at £265 a year and as Iggy Pop battered on my door he joyfully announced a premium increase of some 22% (spooky). So I went straight to and they provided a range of quotes; with Saga coming out at £281: more expensive than last year's rate but not as ruinous as SwiftCover. I'd also had a quote from Swintons which, with an additional discount, was very similar to Saga's.

Having made an on line enquiry, Swintons were on the phone to me in no time. A lovely lady from "up North", enquired as to my health, commiserated on the cost of SwiftCover and assured me that she wasn't sitting in Mumbai and that Swintons had local offices all over the place: including one just down the road from me. "And we offer a further discount" she whispered ever so gently into my ear. Even so, I said they were still slightly more expensive. Ah, she replied but what about your No Claims Bonus (NCB)?

As all car owners know -  the NCB is the creation of the devil, devised by the insurance industry to befuddle and enfeeble.

First, some insurers put you to enormous lengths to validate the number of years of NCB to which you're entitled.  In 2005, I spent a whole day validating and faxing the evidence of  7 years' NCB that the insurers would accept. The Inquisition couldn't be any worse.  

Second, it, or more correctly the treat of its removal, along with excess is enough to discourage anyone from claiming for anything other than a complete write off and multiple deaths and injuries.

I said I had 9 years, unprotected, NCB: why I added the unprotected bit I'll never know. It made it sound like some sexual encounter. On hearing this, my lovely lady purred "Saga will only allow you to transfer 4 years if you switch from them".

In retrospect I should have known that it was a nonsense: but at the time, befuddled as I was I simply said "Oh really, I'll have to think about that." .

Thinking about it I realised that it wasn't possible. If Saga had imposed such a restriction it would have been seen as anti-competitive, since it could inhibit the consumer from switching for fear of losing the benefits of a more valuable NCB. Also, other insurers would simply ask car owners for proof of their accrued NCB entitlement. Anyway, I phoned Saga, who persuaded me that there was no such restriction. As a result I insured my car with them.

Sorted. Except having paid by credit card last time, SwiftCover would have helpfully renewed my insurance from my credit card details - saving me any bother or the worry of paying over the odds. So a phone call was required to stop Iggy Pop from swiping the £300 odd from me.

The otherwise happy result was tainted by the thought that some lovely Northern gals will do anything to seal a sale.

Having received my tempting home and contents insurance renewal  from Churchill - more bully than bull dog I thought - I decided to see what Saga would offer. Typing in my details and that of our house, I was delighted to find that they would insure me for £196 - quite a difference. I checked the insurance specifications - exactly the same level of cover as that of my existing insurer. So I bought it.

The good news didn't end there. On both the car and home insurance Saga were offering a monthly instalment option at no extra cost. This contrasted with the staggering rates of interest you're usually offered if you plump for paying monthly. Brilliant!

Well of course, it isn't plain sailing from now on. The premiums take account of  30% introductory and, on line discounts, and the interest free monthly payments only last a year. And they'll automatically renew so I'll have to go on the jolly old merry-go-round the same time next year. Oh: I also had to phone Churchill to inform them that I won't be renewing with them, to stop them from helpfully helping themselves to my money. 

It must be worthwhile to the insurance industry to offer these low initial deals; most people don't switch and end up paying whatever premium their insurers believe they can justify. I'll be switching again; knowing that the industry is happy to subsidise carpet baggers like me out of  the income from their loyal customers.

It's a looking glass world. The insurers advertise personalised services, to customers they value more than they can say. Yet at the same time they're treating their loyal customers as suckers - so that free-loaders like me can get a great deal.

It's a rip off. I'd have thought the competition authorities or insurance regulators might think this practice was worth investigating. And rather than playing the game, shouldn't "Which" and other consumer champions pressure the industry to stop this con.


Pie Man 70 said...

Its kind of odd really isn;t it. Surely it benefits these companies to keep your buisiness, perhaps by offering a competative deal. Sadly the strategy seems to be "If they can't be botehred leaving just ramp up the premiums" Don't think my house or car has had teh same insurer twice. Similarly I'm on my way to becoming a credit card doxy as well, where I keep transferring to keep my inetrest free balance. A card I've had fo a while goves me no benefits and a fairly high rate of interest, why the hells would I put something on that.

Barry Coidan said...

Humm, the credit card is possibly the best and worst creation since Bridget Bardot and the Twix bars. People stranded because of the volcanic ash can at least use their card to buy accommodation and food etc (provided they're not maxed out). However, you can end up having used your card to its limit and also find yourself still paying for something you bought years ago.