I remember once balking when my car insurance renewal quote dropped through my letterbox, and after a few minutes searching online I had a range of significantly lower quotes. Quietly fuming at the feeling I was being ripped off, I rang my current insurer to cancel the renewal. When I explained I’d found a cheaper offer, they offered to match the lowest quote I’d received. I cancelled anyway, figuring I didn’t want to reward them for sending me a quote well over what they were prepared to insure me for, and then making me do all the homework to get a better deal.
But I’ll be honest, despite having been Consumer Affairs Minister and led campaigns encouraging people to switch suppliers, there have been times when the renewal reminder has come in and I’ve just sighed and accepted it. Or with good intentions put it in a “to do” pile - only to find six weeks have passed by the time I look at it again and the policy has automatically renewed.
We all have busy lives and so anything that makes it easier for people to switch suppliers can make a big difference to what they pay – and the savings can be hundreds of pounds. At our recent Institute of Inertia panel meeting, we heard evidence about what puts people off looking for a better deal.
One idea that might prod more people into switching is forcing insurance companies to include last year’s price on the renewal letter. Seeing the difference in black and white might give people the extra nudge they need to spend a little time looking for a better deal. If 10 minutes checking a comparison site might chop £50 off your quote, that’s a bit of a no brainer. So it’s good to see the Financial Conduct Authority is proposing to make insurance firms tell customers what they paid last year, when they provide a new quote.
Cutting the time and hassle of searching for a new quote will also help consumers. Comparison sites like comparethemarket.com have revolutionised how easy it is to compare different suppliers and get a range of quotes. In seconds you can have information that previously would have taken several lengthy phone calls. It’s usually not too hard to pull together the basic information about your home or car to get online quotes, though I do recall some nightmare quests for information like the specific roof construction of a flat I was renting.
If, however, you’ve had previous insurance claims it can be a faff double-checking the exact dates and particulars of something that happened a few years ago – and if you end up guessing and you’re wrong, it can be a costly mistake. Yet the industry has a database just sitting there which holds all of this information – the Claims & Underwriting Exchange (CUE) – which could simplify this process. Under data protection laws we’re all entitled to access information like this that is held about us, but to say that CUE hasn’t quite joined the 21st century yet is an understatement.
Currently, if you want to access the information about your insurance claims history, you have to print out and fill in a paper form with your details, enclose proof of your address and post it off with a cheque or postal order to cover the £10 admin fee. A cheque or postal order???
Then there’s this gem of a line on the form: “A reply will be made within 40 days of receipt of this completed form, identification and fee.” So if you did want to check your insurance history to shop around at renewal time, you wouldn’t even be guaranteed to get this information before your policy auto-renewed.
It’s 2016: surely we can do better than this. That’s why the Institute of Inertia is calling for people to have free, easy and standardised access to their own information on the claims history database.
As Consumer Affairs Minister, I recognised that the data companies hold about us as consumers is valuable and powerful. It’s also our data, as consumers – it belongs to us, not our bank or energy company. We should be able to benefit from it, to save us time and money or give us insight, rather than it being exploited by the companies.
I changed the law so that the government has the power to make companies give people their data – and for it to be in a standard electronic form across an industry so it is actually useful for comparisons. This ‘midata’ initiative started with banking, energy and mobile phone providers – so that at the click of a mouse you can find the best deal, without having to enter endless information about kilowatt hours used or number of text messages sent. And not a postal order in sight!
It’s early days but it’s already up and running for current accounts and energy bills, and there is so much potential for customers to benefit – from the obvious applications like getting a better deal on your mobile phone bill, to a whole new generation of apps not yet invented that will help people use their data to improve their health or better understand their finances.
Insurance data should be next on the list, and if the insurance industry won’t embrace opening up to consumers about their data, then government should use its power to make it happen.