The RAC is among a number of firms to have been flagged by the Financial Conduct Authority (FCA) for failing to comply with the new transparency laws for insurance renewals.
As a result, the RAC must contact over a million of their members to apologise and explain the situation.
Members who are not satisfied with their policy could claim compensation or even demand a cheaper policy from the RAC.
What were the new rules for insurance renewals?
The new rules came into effect on 1st April 2017. They were introduced to provide more transparency and engagement in the insurance market and industry.
One of the rules required firms to make their customers aware of last year’s premium compared to this year’s premium. This would prevent insurers from getting away with sneaky price rises that customers may not have been aware of.
Firms are also required to encourage their customers to shop around for the best deal, thus promoting effective competition in the market. This can help drive the price of policies down, but it shouldn’t be the responsibility of the customer to ensure that premiums are low.
Insurers are taking advantage of us
Jonathan Davidson, executive director of supervision for retail and authorisations at the FCA said: “It is simply unacceptable to see that some firms are still not being properly transparent with their customers a year on from the introduction of the rules. Firms failing to get this right may have led to consumers losing out as they do not have the right information to decide whether or not to shop around.”
By not making customers aware of any changes to their premiums and failing to advise them to look around for cheaper premiums; insurers are benefitting and profiting greatly at the expense of the public.
As quoted on the Daily Mail:
“A report published last week warned drivers are paying an annual ‘loyalty tax’ of £650million by allowing their motor insurer to automatically renew their policy.”
If insurers cannot follow these simple rules and will take advantage of us, then how are we expected to believe that ‘alleged’ savings from the whiplash reforms will be genuinely passed onto the public?
They promised us that with the whiplash reforms they would lower motor premiums for everyone, yet all we hear are premiums rising steadily; a trend that looks set to continue.
References
1. https://www.insurancetimes.co.uk/rac-punished-as-fca-warns-against-unacceptable-breaking-of-transparency-laws-/1426759.article
2. https://www.fca.org.uk/firms/transparency-insurance-renewals
Image source
1. Wikimedia Commons; https://commons.wikimedia.org/wiki/File:Rac.van.arp.jpg
