Insurance Companies Overcharging Investigation

Insurance Companies Overcharging Investigation.

An investigation has been launched into the overcharging on insurance renewals. The Financial Conduct Authority (FCA) will be looking into the automatic renewal of insurance policies for home and vehicle.

It was found that customers often pay over the top fees and charges for their renewals, and people who stay with the same insurance provider often end up paying more than if they were to shop around.

Our View

We have to say, we find this surpising as many insurers make losses on motor insurance. 

That said, it is very tempting for insurers, where a client simply renews a policy automatically, to have increased premiums and rates.

We liken this to bank deposit, fixed rate and cash ISA accounts.  All too often, people are in an interest rate deal that ends, to then be left on a very low interest rate when the bank is offering higher rates elsewhere.

Is this fair?  Is this treating customers fairly (a doctrine called TCF in the finance industry)?  The answer is no.  That said, banks and insurers are commercial organisations that are in business to make profit and if people cannot be bothered to look after their finances then there is an element of blame with the consumer too.

It will be interesting to see what the investogation of overcharging insurance companies finds.