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6.7 million drivers caught by £1.9 billion ‘loyalty tax’
New research reveals 40% increase in drivers auto-renewing their insurance
- 21% of motorists allowed their insurer to auto-renew their policy without seeing if they could get the same cover for less money (compared with 15% in February 2020).
- Number of drivers auto-renewing is at its highest level since February 2017.
- Drivers who allow their insurance to automatically renew without checking prices could be out of pocket by up to £289.
- Economic impact of Covid makes it more important than ever that motorists consider all their options when their renewal letter arrives.
Ahead of the September peak in car insurance renewals GoCompare Car Insurance is warning that UK drivers are collectively wasting an estimated £1.9bn a year by allowing their car insurance to automatically renew without checking they are getting a good deal.
Lockdown and the continued economic uncertainty over the impact of Covid and Brexit, means it is more than important than ever that drivers pay close attention to their car insurance renewal this year.
According to new research by the leading comparison website, 6.7m motorists paid a ‘loyalty tax’ to their insurer for allowing their policy to be automatically renewed in the last 12 months, without seeing if they could buy identical cover for less money.1
The research revealed that there has been a 40% increase in the number of drivers leaving their insurance to roll-over without checking other quotes. Over a fifth (21%) allowed their cover to auto-renew, compared with 15% of drivers admitting to doing so in the same in the survey six months ago. The number of drivers auto-renewing without shopping around is at its highest level since GoCompare Car Insurance’s survey in February 2017 (23%).
When asked why they allowed their car insurance to automatically renew a fifth thought that because their provider was the cheapest last year, they would be good value this time around too. However, 20% had stayed put because they had talked to their existing insurer about reducing their payments or taking a premium holiday, due to financial hardship caused by the pandemic.
Other reasons for sticking with the same provider included loyalty (22%), concern over the hassle and ease of switching (17%), worries over the loss of their no-claims bonus (11%).
The research found that on average drivers have been with their current insurer 2.9 years. 29% of drivers have stuck to the same provider for three years or more, while 15% have stayed loyal for over five years.
Drivers were also asked about the renewal process which revealed that only a quarter thoroughly read the information they received. Less than half (49%) check their renewal premium against what they paid for cover the previous year, a third check their renewal papers for any changes to the cover they were being offered, while only 27% considered the level of cover they needed for the year ahead.
Lee Griffin, CEO and founder of GoCompare Car Insurance commented, “September is traditionally one of the busiest months for renewals due to historic new car sales. But this year things will be slightly different as insurers are helping those in extreme financial difficulty and, in these circumstances, it could be in the insured’s interest to remain with their current provider.
However, our research shows that millions more drivers are not actively engaging with the renewal process this year, potentially leaving themselves hundreds of pounds out of pocket by effectively paying a ‘loyalty tax’. The reality is that all drivers need to carefully consider their options at renewal this year.
“Drivers who are still paying their premiums really need to shop around this year to see what other insurers are willing to offer them. The good news is that car insurance premiums are falling due to less traffic on the roads and fewer claims.3 As a result, some drivers may actually see a premium reduction on their renewal letter, however that is the signal that they could probably get an even better deal elsewhere. It only takes a few minutes to compare policies and prices, and most of the information you need to do this is in your renewal notice. Just over half of customers using our site could save up to £289, making it time well spent.”2
For more information on the options available to consumers facing financial difficulties and whose insurance is coming-up for renewal visit: https://www.gocompare.com/coronavirus-insurance-money/financial-difficulty-your-options/
Tips from GoCompare to get the best car insurance deals for driver who aren’t receiving help from their current insurer:
1. NEVER accept your renewal quote without first checking that the price you are offered is competitive, even if your insurer was the cheapest last year.
2. Give yourself time to review your cover – note the renewal date in your diary and shop around at least a week before your policy renews to get the best deal.
3. Compare prices AND check the small print. Make sure you make like-for-like comparisons and understand all the charges, any penalties, exclusions and terms and conditions you will be required to meet.
4. Use a comparison website, they provide quick and up-to-date information on a wide range of financial products and services.
For further information please contact:
Anders Nilsson at GoCompare on 01633 654 054
Gordon, Jason or Liz at MAW Communications on 01603 505 845
Keep up-to-date with GoCompare on Twitter; @GoCompare
Notes to editors
1On 23 July 2020, an online survey of 2,061 randomly selected Great British adults was executed by Maru/Blue. For comparison purposes, a probability sample of this size has an estimated margin of error (which measures sampling variability) of +/- 2.1%. The results have been weighted by age, gender, region and social grade to match the population, according to Census data. This is to ensure the sample is representative of the entire adult population of Great Britain. Discrepancies in or between totals are due to rounding.
Department for Transport’s ‘Vehicle Licensing Statistics: (June 2020)’ Quarter 1 (Jan-Mar) 2020 there were 31.7m cars licenced for use on the roads in Great Britain. 21% of motorists auto-renewed their car insurance policy at the last renewal without checking prices. 21% of 31.7m = 6,657,000.
6,657,000 x GoCompare’s average shop around saving of £289 = £1.92billion.
2According to independent research from Consumer Intelligence between 1 April and 30 April 2020, 51% of customers could save up to £289 with GoCompare Car Insurance.
3ABI ‘Motor Insurance Premium Tracker’, published 28/7/20. The average price paid for comprehensive motor insurance in the second quarter of 2020 was at its lowest quarterly level in four years.
GoCompare is a comparison website that enables people to compare the costs and features of a wide variety of insurance policies, financial products and energy tariffs.
GoCompare does not charge people to use its services, and it does not accept advertising or sponsored listings, so all product comparisons are unbiased. GoCompare makes its money through fees paid by the providers of products that appear on its various comparison services when a customer buys through the site.
When it launched in 2006, it was the first comparison site to focus on displaying policy details rather than just listing prices, with the aim of helping people to make better-informed decisions when buying their insurance. GoCompare has remained dedicated to helping people choose the most appropriate products rather than just the cheapest, and has teamed up with Defaqto, the independent financial researcher, to integrate additional policy information into a number of its insurance comparison services. This allows people to compare up to an extra 30 features of cover.
GoCompare is the only comparison website to be invited to join the British Insurance Brokers’ Association (BIBA) and is authorised and regulated by the Financial Conduct Authority (FCA).