It’s that time of year again when my scooter insurance is due for renewal – and for the annual blog post about it.
I was particularly tuned in to the experience this year given the FCA’s recent report on pricing, which we have covered extensively on this blog (summary, the Oxbow Partners view). On Friday morning I went in to bat for the industry when I spoke to the FT about it.
However, Saturday’s renewal experience was once again disappointing.
Issue 1: No sign of my expiring premium
My journey started by clicking on the “renew now” button on an email from my current insurer or broker – I’m not actually sure who the risk carrier is which is a bit odd in itself. (I did try to work it out from the website but couldn’t.)
At no point in the process did I spot my expiring premium – which is a requirement in the UK. Maybe it was there, but I couldn’t find it.
Issue 2: Price walking
I ended up calling and after a load of questions got a quote that was £64 higher than my expiring premium, and £39 higher than the same brand had offered on CompareTheMarket, which I’d checked beforehand. The agent “did not have the online discounts available to him” so I went back to CTM and tried to complete the sales journey there.
As I said to the FT, I’m not sure I object to price walking per se. After all, it happens because of high year 1 discounts and I do believe that the abolition of year 1 discounts will lead to a less competitive market overall. Nonetheless, with the consumer hat on, it’s easy to see why the FCA would dislike them.
Issue 3: The annual game on insured value
Like in 2017, I played the insured value game.
Agent: “How much would you like to insure your bike for?”
Me: “Not sure. How much is it worth?”
Agent: “I can’t tell you.”
Me: “But if it got stolen tomorrow, you’d have a strong view of how much it was worth, right?”
Me: “OK, so if it get stolen tomorrow, how much are you going to give me?”
Agent: “I can’t tell you, that’s claims. They use something called the Glass Index to know how much the bike is worth.”
Me: “OK, then can you put me through to claims so I can ask?”
Agent: “No. I am an information taker, I cannot give advice when you buy insurance.”
Me: “But I’m not asking for advice. I’m asking you for a fact: the amount that you would give me for my bike, which is currently insured with you, if it was stolen tomorrow.”
Agent: “I can’t help.”
Me: “But do you agree that if I choose an amount that is higher than the value that you would pay me if my bike is stolen, then I’m overpaying for my insurance.”
There seems to be some confusion about what the regulator means when it talks about “advice.”
Issue 4: Failed payment with no information
After hitting ‘buy’ I ended up with a blank grey screen with no information on it. I assumed that the purchase had gone through (not least because the rest of the user interface had been so bad) but I thought I’d check by calling in. The payment had failed but the insurer had not sent me any information about this. A customer taking less of an interest in this process could have been forgiven for ending up accidentally uninsured.
It’s an example of why I believe that the user experience should be a regulatory issue, something I got close to saying in my 2018 renewal blog.
Issue 5: Tricking customers into monthly payment
After unsuccessfully trying to pay online again, I called up to complete my purchase. The agent found my quote and then checked that I wanted to authorise a payment of £362 (vs. the £342 that I owed).
That number didn’t sound familiar so I queried it. I was told it was the price if I was paying in monthly instalments (I had selected an annual payment).
Smelling a rat, I asked the agent if she was instructed always to quote the instalment price, and she told me she was. I strongly suspect my payment failed so that the carrier/broker (who knows!) could get an extra £20 out of me. Pretty outrageous – if true.
Conclusion 1: Where the FCA should focus
It’s possible to construct an argument that defends the industry against accusations of malpractice at the macro level – and I’ve been disappointed in the quality of the industry’s defence in the press and other public forums on this topic. The industry is portrayed as a money-grabbing bunch of cowboys when it seems to me that the reality is quite different. However, the practices of some players really pulls the whole industry down. It is therefore my view that the FCA might find more opportunity in its quest to stamp out malpractice by focusing on specific customer experience points rather than more interventionist remedies which have great risk of unintended consequences.
Conclusion 2: It pays to be a cowboy in insurance
The obvious question from all of this is: ‘why didn’t you switch to a better provider’. The simple answer is price, speed and familiarity. Yes, I could have chosen a more reputable brand on CTM, but the price gap was considerable and I don’t expect to need my scooter insurance (stupid but I suspect I’m not alone). Yes, I could have tried the InsurTech market for a snazzy new offering, but that would have taken longer than calling in and would have required analytical thought on a Saturday afternoon.
The sad but true reality is that providers know that they can get away with this poor experiences. It should be stopped.