Folksy Ltd

Renewal of annual agreements

(Ronald Koorm) #1

Annual renewal of everything from car roadside cover to insurances comes in via post or email for many of us, particularly this time of year.

I have to play a ‘game’ every year with my roadside cover membership organisation. They send me an extortionate quotation saying you don’t have to do anything the amount will be taken via direct debit. I phone up and tell them I want to cancel the contract at the renewal date. They are unhappy and point out I have been a loyal member for umpteen years.

I tell them they are uncompetitive, and even online with them, their quote for the same cover is considerably cheaper. I point out that if I cancel I can go elsewhere and save loads of money. They say that online they offer introductory offers which are not applicable after year 1. I say that OK, I will get an introductory offer with another company then and save loads.

They then talk to their manager, and when they come back …just like magic…I get about £100 or more off the original quote. I usually accept !

Do others automatically accept the automated quotations for renewals or challenge the figures ? I point out that on some insurances this tactic doesn’t often work, as premium is linked to risk. However, on things like mobile contracts, roadside and similar cover and lots of similar renewal type contracts, it works brilliantly.

(Eileens Craft Studio) #2

I only do that with my specialist car insurance company as they specialize in high end cars, modified cars and imported cars. As mine is in all 3 categories and most car insurance companies wouldn’t even offer me a quote while the few that will charge anything from £1,500 to £3,000 more.

They don’t advertise on those compare site’s or advertise on TV they go through Car Owner Clubs and by word of mouth.

I also don’t have to worry about my mobile phone as my contract is only for what I use. So my monthly bill from Orange is about £8 per month at the most as I own my phone so it’s not part of the contract. No one could offer me anything any where near it.

House Insurance we don’t have to fight with either but they no longer take on new residential customers as they have gone back to insuring Religious buildings ie Church’s and other properties owned by churches and charities.

We laugh all the way to the bank at how cheap our insurances are.

(Samantha Stanley) #3

Hi Ronald,

I may have mentioned before that I used to work for the legal department of a motor insurance company :frowning: . The long and the short of it is that long-standing customers often renew without thinking about it. That’s why they want you to set up a direct debit in the first place!
The cost of finding new customers is quite high and the market for the new customers is ridiculously competitive, which drives that price down. The result is that your motor insurance company and your breakdown cover are using you, as a long standing customer to fund the offers they make to new customer. New business is always prioritized over you!
The only way around this is to change company every year, then you are always a new customer and never a renewing one. However, you have to watch the dates when everything is due, be sure to cancel your direct debits and compare policies and even compare the price comparison sites in order to get the best deal. Don’t believe the ads, price comparison sites and traditional brokers also play this silly game!
Personally I think this does the industry nothing but harm and they should charge a flat rate regardless of whether or not you are new business, after all, they know you and they know your claims statistics, so that makes you a better risk in many ways than somebody whose history they don’t know.

Sam :blowfish:

(Sasha Garrett) #4

Not owning a car I don’t have to worry about that insurance or breakdown cover but we had a similar phone call with our broadband/ phone supplier - they matched the best quote we had found online - we saved a bundle and didn’t have to switch.

(Eileens Craft Studio) #5

Samantha @Mermaid’s purse

As I own a modified grey import comparison sites are just not an option in my case as for the reasons I’ve already stated.

I could never get a better quote than the one I have from another company.

So no point trying to change every year unless I want to pay way over the top for my car insurance.

(Christine Shephard) #6

I do the same thing every year with all my insurances etc - I never accept the quoted renewal price, always check out other cheaper options, then ring the company and say I’m taking my business elsewhere (politely, of course!). Nine times out of ten they reduce their quote and I save shed-loads of money. Laziness and apathy (or just plain convenience) can be very expensive!!

(Jan Ryan) #7

I check the comparison sites every year and I’ve been with the same car insurance for the last 3 years because it’s been the best deal. :slight_smile: However, I checked my breakdown cover and found out that as a new customer it would be nearly £40 cheaper. I complained to them that there was no incentive to stay with them and I was no better thought of for being a loyal customer for umteen years. Hey ho, they reduced my premium :slight_smile: I don’t know if they will reduce it again this year but if not I know I can get it cheaper as a ‘new customer’ elsewhere.

(Elaine) #8

I always look at the price comparison sites for home and car insurance and every year, for the last 3 or 4 years, we’ve been able to reduce these outlays. I have several instances when phoning the insurance company at renewal time to query the price to be told they won’t budge on it. Quite often I cancel the policy and just start a new one (sometimes the same company) - this certainly happens every year for breakdown cover. Madness.

(Joy Salt) #9

I was advised that you should always do your phoning around for better deals at the beginning rather than the end of the week. Reason being that each operative has a weekly ‘pot’ which they can hand out over the week so this pot is bigger at the start of the week and they are more likely to give you a more generous reduction !

(Ronald Koorm) #10

I see that Natwest have a series of TV adverts pushing their “we don’t discriminate against loyal long-standing customers over new business…” I think the more people shop around, and cancel agreements and go elsewhere, the better. But it can be hassle and take time.

Also, some companies have a block on people leaving and coming back to take the introductory offer within a set time period. (Some have this as two years or more).
Yes, you can always return as a customer, but don’t bank on being offered the same intro offer as a genuine new customer. Always check first in the small print before you want to go down this route.

(Samantha Stanley) #11

Don’t worry about those terms Ronald! My husband has persuaded companies to waive them in the past. The only way they’ll worry if you’re a customer that has been away for a year or so is if you tried to defraud them the last time you had a policy. And even then they will agree to a premium if it suits them. Also, insurance companies do have a pot of money but they manage it on a yearly basis with monthly targets, so there is always some wiggle room there. Grey imports are a bit of a special case and there are few companies that want to cover them as they need bespoke underwriting (by a person not a computer) so that is why Eileen cannot take advantage of the competition in the general market. The company I used to work for did underwrite grey imports and modified vehicles for a while (it was a Lloyds syndicate) but they cause so many problems on the claims side of things that they dropped these risks except for renewing customers, to which they charged a “handsome” premium.

Sam x

(Ronald Koorm) #12

It’s really great that your husband managed to get companies to waive their terms, but as you will know, every company is different and they all have different policies, different targets, and aims.
I used to negotiate business contracts and terms some years ago, and found some companies are really flexible, and others definitely not so. Always worth a go, though.
Yes, timing of your negotiation can be important, just like when you buy a new car, can make a difference of getting nothing of the retail price or thousands off.
You can always walk away if they say ‘no’ !

Have just had to pay an insurance company (which I never dealt with before), a very large insurance premium because my usual firm dropped out of that part of the business. Problem is, the insurance I needed was so specialised there are no comparison websites, no broker wants to touch it, ( I spent ages and ages talking to different brokers), and I have to have this insurance due to my personal circumstances. Have been told this particular insurance company is ‘doing me a favour’ in offering the specialist insurance and only offering it because they get so much business from the broker.

So if you can shop around , great, but not everyone is able to, all of the time.


(Samantha Stanley) #13

I see your problem, Ron. The thing about motor underwriting is that they can reduce their prices considerably for generic types of vehicle (like my Xsara Picasso) because there is lots of data available to the companies about the risks of claims. If you fall into an unusual category, then you can’t benefit from this at all, because the companies tend to err on the side of caution and this looks like that is happening to you! In that instance you don’t have a lot of choice, and looking around might be too much leg-work. The upside is that your last insurer does have an obligation to insure you, so you won’t be left without a policy.

Sam x

(Ronald Koorm) #14

Well, the specialist insurance I mentioned wasn’t actually anything to do with motor insurance, it is a commercial type of insurance called “run-off” cover for professionals. (eg Architects, Designers, Surveyors, Medical Professionals).
The guidance is that you have to have it for at least six years after ceasing trading and as the risk reduces you pay a bit less each year to your insurer. (In theory you can be sued by a client up to 15 years after the work done, but six years is seen as a compromise.)
But it doesn’t work that way in practice.
The original insurer pulled out of that part of the market because it wasn’t making them enough money, and I was advised they have no liability to continuing insuring me, which puts me in a spot. Anyone you approach who is not the original insurer says “…not for me !” and refers me back to the original insurer, who traditionally covers their long standing professional client in retirement.
So the new insurer treated me as a new client, and ignored the fact that as time had passed, the number of clients that could potentially sue me for negligence became fewer and fewer every year. The premium soared.
Annoying thing was that the original insurer, a major player in the business, didn’t even write to me to say this was going to happen, so only found out at renewal time via the broker.
So please forgive me, if I am rather cynical about the insurance industry.
They are as bad as the bankers, in my view !

(Eileens Craft Studio) #15

As you found out via the broker have you contacted the company directly? To find out if what the broker said is correct.

(Samantha Stanley) #16

I’m sorry you’ve had a bad experience with this Ronald, but most insurance companies don’t make enormous profits and even the top executives aren’t paid enormous salaries with bonuses on top like the bankers are! For somebody with my level of qualifications, I was not paid enough to justify working part time while bringing up my children, as my salary would have been swallowed up in childcare. I don’t know what your former profession was, but unless you can be prosecuted under the criminal law for not having insurance, it may be cheaper for you to “self-insure” as you know the professional risks you ran in your career better than your insurance company will ever do. This is actually the classic advice for anybody who is not required by law to insure and finds the premiums too high. The fact that most insurers do not want to continue in this business indicates to me that there is hardly any profit in it, and if there is no profit then the company may find itself in the position where it can’t afford to pay it’s own wage bill if there is a higher than expected level of claims. If you want somebody to blame for high premiums, as somebody who worked on the claims side, I would blame fraudulent claimants. It is often impossible to prove fraud even when you strongly suspect it and the claimant can be awarded many hundreds of thousands of pounds in a personal injury claim, or even more! In addition, almost every claim is inflated these days to some extent, although once again it is difficult to judge by exactly how much. It is the “no-win/no-fee” companies that are largely to blame for this increase, billing companies £50 here for “loss of amenity” and £100 there for “inconvenience.” It’s not nice for the poor customers like you who find themselves over a barrel, but the people who are making these claims don’t realize it is other individuals who are paying the price. I think your broker should have been more on the ball about this and informed you what would happen before renewal. The broker is supposed to act in your best interests and I am sure they must have known this change was coming. I presume that they have/had other clients who were due for renewal sooner than you were who have also gone through this pain. I agree that the company should also have written to you too, in plenty of time to make any arrangements you needed to. I think you should ask your broker if there is any independent ombudsman who covers this type of insurance as you may find contacting an ombudsman lends a lot more power to your elbow!

Good luck,


(Ronald Koorm) #17

No, but I have established via detailed research that there may be a trend for some insurers to move out of the market of ‘run-off’ cover. Having contacted my professional institution, and discussed both via phone and email, they are disturbed at this potential trend, and would be monitoring it, but say it is down to ‘market forces’, which is entirely correct.
The downside for the customers longer term, is that when professionals retire or decide to do something else in future, they may not be able to get run-off insurance, and that could leave past clients exposed in negligence claims, usually over a six-year time period after the work was done.
( The Limitation Act puts a fifteen year time limit on claims, but those happen generally on very substantial projects with contracts under seal which covers 12 years .)
To ‘self-insure’ is an option I have previously considered but is actually contrary to the membership rules of the professional body. Of course one could leave the membership of the institution, but that would cut all sorts of links.

I also appreciate Samantha’s advice and comments too, and suspect that what will happen longer term is that for the remaining insurers that provide run-off cover, they will probably raise their premiums substantially, making small one-person professional practices have to raise their fees to the customer, or adjust their service quality. In other words, the bigger firms will be able to ‘ride the storm’ financially better.

Problem with all this, is that when one is in professional practice, the last thing you are thinking about is the cost implications of retiring, or doing something else. It’s a bit like pensions, and why many people keep putting off making adequate pension provision, or can’t afford to.

(Eileens Craft Studio) #18

oh my does this also apply to retired surgeons and doctors do you?

(Ronald Koorm) #19

My professional area is surveying, (via RICS) , and am still currently a ‘FRICS’, so that is the area I am qualified to comment on, but the principle of ‘run-off’ cover applies to many varied and different professions.

It is a very complex area. For example, school headteachers tend to get their PI insurance paid for by their employer, (or possibly in some cases, via their union ?).
Have no idea how surgeons arrange their “run-off” cover. It might be if they are directly employed by the NHS, then the NHS with it’s big purchasing power might negotiate with insurers for them, but if you are an external consultant who is freelance, then it’s probably down to you as an individual. I guess that they will also be members of their own professional bodies, who will have their own views.
But it is an area I think there is probably no real co-ordination across the different professions, and probably needs to be.
The last thing a person using a medical procedure that goes wrong due to negligence wants to hear is that the surgeon who performed the 'op had no, or insufficient professional indemnity insurance.
In law, that is almost irrelevant, as the patient or estate can still sue the surgeon / professional and go after their assets. (includes house/ car/ yacht/ bank balance/other property). Some are crafty and put their assets in the names of their spouses, to protect them !
But any lawyer will tell you it is pointless suing ‘a man of straw’, or in other words, someone who has no or few assets.
Not an expert on this, but you have three years in law to sue on personal injury from the time the injury occurred. I managed to avoid taking my local authority to court when I suffered injury some years ago, but it was a battle.

Sorry for this getting to be a heavy topic, did not intend for it to be ! Was initially about simpler things, like mobile contracts and car cover.

(Ronald Koorm) #20

Thanks for the advice.