A new report published recently suggests that loyal car insurance customers are facing an extra fee of up to £50 a year, simply by sticking with their existing provider. This so called “admin fee” has been charged by some pretty big name firms as well, such as Swinton, Hastings, Saga, and Budget all admitting they charge customers for renewing their car insurance.
The investigation by MoneySavingExpert uncovered that at least 9 big car insurance providers are charging these annual fees, and it is the customers that auto-renew their policies that have been hit the most, with many people not even aware they are being charged for the privilege of being loyal and keeping their business with the same company.
Honestly, this whole thing is just plain ludicrous if you ask me. Surely if you want customers to stick with you then it makes sense to reward them in some way and offer incentives for being loyal…that sounds logical, right?
Well, it seems that many of these big insurance companies have just completely lost touch with reality, and it wouldn’t be a surprise to see them lose a lot of business if they continue to do the same kind of things in the future. It almost feels like they are ripping off their customers.
One lesson everybody should learn from this is that you should never automatically-renew a policy with any kind of company. If you do, then it basically gives them a free pass to add on extra fees and charge you whatever they like…all in the name of putting extra profits onto their bottom line while the customer is out of pocket.
Instead, just sign-up for the minimum term with your current insurance provider, and then you are free to shop around and negotiate a better deal when the contract is nearly up.
So how much could these extra fees be worth to some of the car insurance companies? Looking at the financial accounts of Swinton you can see they have approximately 2.2 million policies in their system, with one insider estimating around 40% of these people are on auto-renew.
When you look at figures like this it’s easy to see why many of the leading providers have been trying it on, as essentially this is “free money” up to the tune of £50 million a year if you are a big company like Swinton. Of course, it doesn’t make it right though does it? In my opinion, if this kind of trend continues and more insurance providers follow suit then it might be time for a higher authority to step in and put a stop to it.