A Which? survey found that some drivers are negotiating cover up to £200 cheaper than the quoted renewal price, raising questions about whether firms are meeting regulatory requirements.
The Financial Conduct Authority’s (FCA’s) Consumer Duty, which came into force in July 2023, states that firms must demonstrate the price a consumer pays for a product or service “is reasonable compared to the overall benefits they can expect to receive”.
For general insurance products, firms have been subject to other regulatory requirements to offer fair value since October 2021.
A study by Citizens Advice last year found that almost three million motorists have stopped driving as they can’t afford car insurance.
Save cash by haggling
Which? claims that if significantly better prices are offered – but only after haggling – insurers may be in breach of the rules.
Click here to view our Sponsored Content Hub
The consumer champion carried out a survey of more than 2,004 UK adults with car insurance. Six in 10 (59%) respondents said they haggled with their insurer, most of them doing so over the phone.
For most people, haggling was highly effective – with three-fifths (61%) of those who contacted their insurer getting a reduction to the original price offered.
The average amount motorists that pay annually for cover saved per year was £64, although some received much more sizeable reductions.
One in five (22%) respondents said they saved between £20 and £40 off their insurer’s first offer, while the same percentage said they got between £40 and £60 off their quote. One in 10 (11%) said they got between £60 and £80 off, and a similar percentage (9%) said the reduction was £80-100. Some 3% saved more between £100 and £120, while 5% said they were able to save more than £200 after haggling.
Overall, half (49%) of drivers noticed their premium go up at their last renewal, while a quarter (27%) saw a reduction.
The FCA has said that where upfront discounts are clear and firms can demonstrate that customers not receiving discounts are getting fair value, this could meet regulatory standards. However, it is unclear how transparent these discounts are to consumers and how firms justify them.
Are drivers paying over the odds?
With some motorists receiving such hefty discounts after haggling, Which? believes there are “serious questions” about whether the first offer from the insurer in these cases really represents fair value, as per the FCA’s Consumer Duty requirements.
The survey found that 40% of respondents didn’t discuss the price offered before renewing, suggesting that many customers may be unfairly paying over the odds.
Sam Richardson, deputy editor of Which? Money, said: “Some motorists may be forgiven for wondering how the first price offered by their insurer could ever represent fair value if such big reductions in the cost of cover can be achieved with a simple phone call.
“The FCA should look into this to determine whether insurers are falling short of their requirements under the Consumer Duty to offer fair value.
“While some people may feel daunted by haggling with their insurer, this research underlines how it is worth doing for many consumers and is likely to be one of the most effective ways to cut the cost of your renewal.”
