According to research carried out by consumer groups and the Daily Mail, car insurance companies are making as much as £1.3bn in total by ‘leaving customers in the dark’.
This is through not informing customers of the price they paid for car insurance the previous year, when their insurance was rolled over.
In 2011 the government introduced a law which meant that insurance companies were obligated to renew car insurance automatically, unless the customer cancelled it prior to it expiring. This was in an attempt prevent significant payouts to victims of accidents, which involved uninsured drivers, which had been causing premiums to rise.
However, this system has led to many customers being at risk of ‘hidden costs’ causing their premium to rise. Shopping around could potentially save customers as much as £213 on insurance apparently.
The research carried out suggests that 20 per cent of the almost 30 million motorists in the UK let their insurance renew automatically each year, resulting in a combined loss of £1.3bn to insurance companies.
“The longer you stick with your insurer, the worse it gets,” said James Daley, of Fairer Finance. “It’s as if you get put on an internal suckers’ list where they start to ratchet prices up. There’s a moral responsibility by insurers not to exploit people.”