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James Baggott: Why should I pay more just because I’m a new customer?

Time 6 years ago

WE all have to have it, we all hate it and it always comes around faster than you think it should.

No, I’m not talking about your prostate exam, I am, of course, referring to that other painful experience: paying for car insurance. This month, I’ve had the dreaded bill drop through the letterbox, but it’s the experience which followed that makes me think car insurance could easily become the next PPI mis-selling scandal. Or in fact a whole lot worse.

Let me explain what happened to me before I rant, because it’s been a month since the last one of those and I’m in the mood for a vicious one. Aforementioned letter landed on the mat and I just about managed to save it from the jaws of the New Dog before it became shredded paper.

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Letter safely in my hand, I discovered that for my wife’s Mitsubishi Outlander PHEV, the insurer – who will remain nameless so I can really rant – wanted £384 for another year’s cover. Which, considering she drove our last car into our house twice, is quite a good deal. (We’ll see if she actually reads my column now, won’t we?)

So, being the bargain hunter that I am, I always check out a comparison website before renewing car cover. On
Confused.com all my details were saved from last year’s quote when I bought the PHEV, so I simply ran the quote again. Needless to say there were many cheaper, but the bit that really annoyed me was that the cheapest – at £300 – was from the provider I was already with. How does that work?

I called the insurer to ask them exactly that. ‘Oh, that price is for new customers only,’ said the smug call handler. ‘The best we can do for you is £354.’

‘Hang on a bleeding minute,’ I said, ‘how in the world is that fair?’ ‘That’s the way it is, sir,’ replied the smug one.


Now, let’s think about this for a minute. Dealers are lambasted with FCA regulations that insist on ‘TCF’ – treating customers fairly, as if you hadn’t had that rammed down your throats enough. These rules state you must ‘minimise the sale of unsuitable products by encouraging best practice before, during and after a sale’. While I can understand why the bemused checkout girl at Morrisons might not have had this level of training when it comes to inappropriate meat purchases, I would fully expect insurers to abide by the same laws.

Charging your existing customers and new customers two completely different prices is inherently wrong. It’s unjust, it’s conniving and it’s a con. Insurance companies categorically should not be allowed to get away with such shoddy and dishonest sales techniques. What makes matters even worse is that most insurance companies save your credit card details and automatically renew a policy should you not cancel in time. Again, that’s wrong and unfair. I don’t remember being asked if I wanted the insurer to save my details to take another payment without me asking – and even if they did it was obviously not clear enough as I wouldn’t have allowed it to happen.

Imagine if this was the same in the world of car sales. Your existing Ford Fiesta customer has to pay £1,000 more for their new Fiesta as the cheaper price is only for Vauxhall Corsa drivers who want to change (and who could blame them?).

What if you sent out different prices for cars to customers in the post in the hope they ignored the letters and then you just charged their credit card anyway because you saved the details the last time they came in and whispered quietly that you might do it? Ridiculous isn’t it? But that’s exactly what insurers are getting away with.


Yes, I know I could have changed to another insurer (and that’s exactly what I did in the end), but it was the fact that I had two very different prices – one on the renewal and one on the computer screen – from the same insurer which annoyed me so much. That, and the fact insurance companies are so arrogant they think they can get away with it.

I thought about calling the press office and asking for their opinion, but knew they’d just quote the same old line that’s let them get away with this underhand stealing for so long. I thought about speaking to the Association of British Insurers too, but then with a name like that, whose side are they going to be on? Not ours is it? Insurance renewals have got mis-selling written all over them.

They don’t treat customers fairly, that much is very obvious, and they don’t ‘minimise the sale of unsuitable products’. How long will we have to put up with this theft before someone makes a stand? Or do we just wait for the legal vultures to circle and let another almighty scandal play out while hoping the compensation payouts fund another round of new car deposits…?

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James Baggott's avatar

James is the founder and editor-in-chief of Car Dealer Magazine, and CEO of parent company Baize Group. James has been a motoring journalist for more than 20 years writing about cars and the car industry.

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