Consumer complains about price increases of their insurance policy at renewal

Insurance Pricing Home insurance

Dana complained her insurer had charged her too much for her insurance after finding a cheaper policy with another provider.

What happened

Dana insured her home. She took the policy out in branch and paid £630 for the first year’s premium. She didn’t tend to shop around and didn’t have a computer at home, so when she was offered the review in branch, she was happy to take it.

Dana made two claims on the policy, one for theft two years after taking out the policy and one for accidental damage the following year. She received her renewal quote four years after taking out the policy and felt the price was too high. She called her insurer to see if it could offer her any discounts and was offered a £50 reduction. She accepted this and renewed the policy.

Dana’s policy increased in price annually and after two years of renewing her policy, she asked her daughter to help with the premium because of how the price had increased. Dana’s daughter looked online and found a suitable alternative policy for significantly less than she was paying. Dana cancelled her policy and took out a new policy with a different provider. 

Dana didn’t think the price difference was fair and that she’s been overcharged for her insurance for several years. She complained to her insurer.

Unhappy with the outcome, she contacted our service to make a complaint. 

What we said

The insurer explained the two consecutive claims made on the policy meant it removed an initial No Claims Discount which had the effect on increasing the base premium of the policy relatively quickly. But this price was reflective of how it assessed the risk and still included a new customer discount which wasn’t recouped until three years after Dana bought the policy.

It also said it updated its system which affected how it considered flood risk. As a result of the change Dana’s property moved from a low flood risk rating to high flood risk rating and was now considered a high flood risk.

We asked why the flood rating changed and the insurer explained it had moved from a postcode rating system to an address point rating system which allowed it to be more specific with the risk it was applying to the property. 

We didn’t think there was anything to suggest the policy was mis-sold when it was first taken out. And although Dana was able to find her new policy for significantly less, we were satisfied the policy was priced fairly.

Every insurer will assess and price risk differently and the insurer was able to demonstrate why the price had increased and that this was in line with how it assessed and priced the risk. And as the property was built after 2009, the policy couldn’t be ceded with Flood Re. So we didn’t think the price increases on her policy were unfair as they represented the businesses view of the risk and we were satisfied her lack of engagement didn’t impact this.

We were also satisfied there was no alternative policy available with the same insurer so when she called it to seek a discount, it offered all it could to reduce the premium.

We didn’t uphold Dana’s complaint.

We understood why Dana was unhappy at being able to find alternative cover for significantly less than she’d been paying. We were satisfied the insurer had increased the price because of its changing view of the risk. And we explained why we didn’t think her insurer had acted unfairly with how it treated her and priced her policy.