Consumer complains that premium increases were unfair

Insurance Pricing

Melvin got in touch because of a change in his circumstances and he felt he'd been paying too much for his insurance.

What happened

Melvin had his insurance with the same insurer for six years. He bought the policy online after finding it on a price comparison website. When his first renewal invite came through, Melvin called the insurer to discuss this and see if it was their best price. He did the same the following year and the year after and received a small discount on the renewal price offered each year following small changes being made to the policy. 

After three years of taking out the policy, Melvin changed jobs and was working longer hours than he had before and was often away from home. He didn't contact his insurer when the renewal invites came through as he was simply too busy and he didn't realise the policy had renewed each year until after it already had. The policy automatically renewed with a monthly direct debit being taken for the premium and he didn't notice the change in this amount. 

Melvin got in touch with his insurer three years later, as his circumstances had changed and he had more time at home. This meant he had more time to manage his affairs as he had previously. Melvin looked online before calling his insurer and found a policy which was suitable for around the same price as he originally paid when the policy was first taken out. He called his insurer to see if this could be matched but the insurer wasn't able to do this. Melvin cancelled the policy and took the new one with the new insurer. 

Melvin complained to his insurer that he felt he had paid too much for his insurance in his fourth and fifth year in the policy. He felt the price rises were unfair and he lost out because he hadn't been able to engage on these and question them at the time. 

Unhappy with the response, Melvin contacted our service to make a complaint. 

What we said

Although Melvin had previously been active in checking on the price of the policy and was clearly aware of how insurance worked and the benefits of shopping around, there had come a point where he hadn't been able to do this. So we wanted to be sure that when he hadn't been in touch with the insurer, he had been treated fairly.  

As with any price increase on an insurance policy, we expect an insurer to be able to explain why there's been an increase and that it's been applied consistently with their customers. In Melvin's case, the insurer explained to us the level of new customer discount applied to the policy when Melvin first took it out. This was a significant discount and meant the price he was charged was less than what it believed the economical view of the risk was. It had increased the policy price gradually over the years to recoup this and this was in line with how it priced all policies that received new customer discount. 

The insurer had been able to offer additional discounts when Melvin called during the earlier renewals. But it explained these were based on it making changes to the level of excess as well as other changes to the level of cover. 

We were satisfied that the insurer had treated Melvin fairly. The price increases were in line with how it viewed the risk with how it applied this to all its customers. So we didn't think the price was increasing simply because Melvin had stopped engaging. We decided not to uphold Melvin's complaint.