Direct Line may be the tip of an iceberg of over-charging insurers, says JEFF PRESTRIDGE
The announcement by Direct Line that it will be providing £30million of compensation to customers who paid more for their insurance at renewal than they should have done was not a surprise.
For the past 20 months, the Mail has gathered irrefutable evidence of insurers breaching rules on the pricing of car and home insurance.
We’ve published our findings – and shared them with the Financial Conduct Authority.
Direct Line may just be the tip of a monstrous iceberg. Other insurers are highly likely to be found guilty of similar rule-breaking in the months ahead – and be required to pay redress by the FCA.
Direct Line’s crime was to charge existing customers more for their insurance than someone buying identical cover from them for the first time.
Direct Line may just be the tip of a monstrous iceberg. Other insurers are highly likely to be found guilty of similar rule-breaking in the months ahead
At the beginning of last year, the FCA banned such discriminatory pricing because it exploits loyal customers who are quite happy renewing cover with their insurer rather than shopping around for cheaper policies.
Often, these long-standing policyholders are elderly and mistakenly think their insurer will always have their best financial interests at heart.
No chance. At the time of the new rules coming in, the regulator said the ban would save consumers £4.2billion in premiums over ten years.
Yet, with inflation-busting premium increases across both the car and home insurance markets, any savings are being wiped out in spectacular fashion.
Some would argue Direct Line has got off lightly. After all, the FCA has the power to impose heavy fines on companies falling foul of its pricing rules – even suspending them from doing new business.
Maybe these punishments await the next miscreants.