The country’s Premier League is brimming with money, as evidenced by the £815m spending spree on new football players during last month’s transfer window.
But now Money Mail is producing its own version of the Premier League – the Premium League, a table that is expected to embarrass some of the country’s biggest insurance companies and fuel the idea that these firms are using the inflationary backdrop to boost premiums by obscene amounts.
In Money Mail, they profit at the expense of customers who are already struggling with skyrocketing energy bills and ever-higher food costs.
Some of Britain’s biggest insurance companies are profiting at the expense of customers, already struggling with skyrocketing bills and food costs
Our chart includes 20 of the biggest premium increases that car owners and households have been asked to pay when renewing their auto and home insurance in the past two months.
Our league has 20 teams because that is the number of football teams that make up the Premier League.
The chart was built on the back of correspondence sent in by hundreds of readers who responded to our coverage on rising insurance costs.
Many of the biggest premium increases have been for seniors, some of whom don’t have internet access, which would allow them to shop around for coverage.
While a handful of insurance customers admittedly saw their premiums drop on renewal, the vast majority were asked to pay 40-50% more than last year.
These figures indicate that auto and home insurance premiums are rising faster than forecasters had expected.
For example, a study late last year by management consultancy EY suggested that car and home premiums would increase this year by an average of 15% and 30% respectively.
These numbers now appear low, although it can be argued that our analysis is skewed by the fact that unhappy customers are more likely to contact Money Mail.
Tellingly, our mailbag supports EY’s view that premium inflation is most prevalent in the home insurance market – due to increased sag claims caused by the hot summer from last year.
As our table shows, some policyholders were offered renewal premiums three times higher than a year ago.
In all 20 cases, Money Mail has been told by customers that the spikes are not the result of a recent complaint.
Worse still: Most of the biggest premium increases have been demanded of seniors, some of whom don’t have internet access
Indeed, if renewal premium increases requested from customers who claimed in the past year were included, the resulting table would be more Super Premium than Premium.
For example, two readers – Rita Parker, 85, of Sidcup in Kent, and Alan Paice, of Marham, Norfolk – were hit with respective renewal premium increases on their home cover of 314 and 215 per cent after they lost their hearing aids. .
These increases would have placed them in the top five of our Premium League.
“Last year I paid an extra premium for my hearing aids which brought the cost of my cover with RIAS to just under £242,” says Rita.
“When I lost one after staying with my daughter after surgery I made a claim for £1,973 which was satisfied.
My reward ? A renewal bonus of £1,001. When I asked for the raise, RIAS gave me no explanation. Twenty years of loyalty to the insurer and I am rewarded with an increase of 314%.
Rita has now moved on to Saga and paid £467 for her cover.
In most – but not all – cases those stung by the Premium League increases have managed to shop around for more competitive coverage.
This again confirms our message from last month that when it comes to buying coverage, it always pays to shop around rather than stick with one insurance company.
The advice is despite rules introduced early last year by the country’s financial regulator, designed to ensure loyal customers do not pay higher premiums than someone buying identical cover from the same insurer.
Although the Financial Conduct Authority has promised that ending the loyalty penalty will save long-term customers £4.2billion in premiums over the next ten years, shopping – rather than staying put – remains the best way to reduce premiums.
Increase: as our table shows, some policyholders were offered renewal premiums three times higher than a year ago
Understandably, some of the people who have been asked to pay triple-digit raises are furious.
Nor will Michael Herson, from Middlesex, who received a renewal notice for his home cover from Saga stating the premium would rise from £715 to £3,688 – a stunning increase of 416%. He has had his Saga insurance for 19 years.
“I have lived in the same house for 24 years, my details have remained the same and I have five years of no claim,” he says.
Despite a long correspondence with Saga, the insurer did not move.
Michael says the only explanation he can think of for the increase is a sag claim he made over 12 years ago (which only affected the garage) – and the insurer’s wish to “ get rid of legacy customers”.
He is now looking for alternative cover and has received quotes which represent half of Saga’s renewal request. Pauline Davidson – like many in the picture – managed to avoid a big renewal surge by shopping around.
Last year she paid Performance Direct £223 for annual coverage on her Jeep Patriot. This year they wanted £592, an increase of 165%.
Pauline, an 82-year-old retired teacher from Maidenhead, Berkshire, says: ‘I drive less than 5,000 miles a year.
I have never had an accident or made a claim. But when I challenged Performance Direct on the hike, he refused to back down.
She looked at other options via a price comparison website and switched to Swiftcover for £328.
The final word goes to Maura Evans, a 67-year-old retired teacher from Cheltenham. The renewal premium for his home cover with Saga was £782, a 194% increase on the previous year.
“What kind of insurance market thinks it’s good to demand such an increase in the number of customers,” she says. “I haven’t made a claim in over 30 years.
“I thought the city regulator acted to stop the insurance company’s scam tactics — not make it worse.”
Well said. It’s a Premium League table that puts the insurance industry to shame.
Yesterday Ageas (which owns Rias) and Saga blamed higher premiums on higher claims costs.
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