James Coney  

Insurance policies prey on the time-poor

James Coney

James Coney

Every August the same renewal letters land on my doormat.

Plonk, here is the car insurance. Plonk, there is the home and travel. Plonk, the car tax, the council parking permit. If you want to know why it is so hard to drum up new clients, then perhaps consider this tiresome pattern.

With the arrival of each letter you have to hunt around on a comparison website – to find a cheaper price from the very same company you are already with.

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You call up: press one, press three, enter your policy number, enter your date of birth, press five, wait to speak to a person, ‘We’re experiencing high call volumes right now’, Dire Straits comes on.

Put phone on speaker, potter around, then 10 minutes later a human voice – just as one of the kids comes in to ask what you are doing.

Give them your policy number (again), give them your date of birth (again). One minute later and you have been offered the same price as online.

No apologies, no excuses. This is just the acknowledged dance of modern life. 

It does not have to be like this.

But despite various investigations, embarrassing front pages in national newspapers and warnings from regulators, general insurers still persist with this infuriating practice, just to catch out the lazy, the disadvantaged and the time-poor. 

And then just when you think it is all over: plonk, the life cover. 

Of all these bills it is this latter one that annoys me the most, and it is all because it only goes up with inflation.

I cannot pretend I have shopped around for a policy for five years or so. 

But every year the increase exasperates me because it is linked to retail price index and not consumer price index. It is a deliberate ruse that is being used to get a few extra pennies out of me every year. 

As we all know the use of RPI as a measurement for rises in the cost of living is outdated and inappropriate. The national statistician from the Office of National Statistics has described it as poor measure of inflation. 

Generally, while it does occasionally fall below, it is above CPI by about one percentage point. 

This problem is of course not just limited to life insurance, but also to pensions.

Some annuities and older defined benefit schemes have a contractual obligation to increase payments by one or other measure – some simply say ‘inflation’.

When it is the latter case, invariably schemes have moved to use CPI as a measure, when it is the former they have had to stick with whatever the contract says. 

There is nothing I can see in my policy documents that says my premiums must rise with RPI – and I have tackled Legal & General on the phone about it.