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Posted in Insurance News | Comments Off
Saturday, November 28th, 2009
Maurice Henderson has loyally stayed with Royal Sun Alliance since 1951. His reward? Premiums four times as high as for a new customer
A Leicester teacher is warning those with elderly relatives to make sure they are not being overcharged by insurance companies after her father was quoted almost £650 – four time more than he needed to pay – to insure his modest Derbyshire home.
Elaine Henderson contacted Money after working out that 83-year-old Maurice has paid around £3,500 more than necessary to Royal Sun Alliance (RSA) over the past two decades because he loyally renewed his buildings and contents insurance each year.
When she queried his most recent renewal quote of £648 – for a two-bed bungalow in Clowne, near Chesterfield – she found that RSA’s own online subsidiary, More Than, was offering basic cover, on the same home, for just £135. Adding in additional cover took the price to £161.58 – almost exactly a quarter of what he was being charged.
The case, once again, demonstrates why it is so important to periodically shop around at renewal time. It also mirrors the experience of many other older Money readers who have made dramatic savings by switching supplier for the first time in a decade.
“I happened to be visiting him at the time his renewal came through and he casually asked whether he thought the price was reasonable. When I looked at it I couldn’t believe he was paying so much,” says Elaine, who is a special needs primary school teacher.
When she delved a little further she found that her father, a retired head teacher, had simply renewed it each year, believing that sticking with RSA was the right thing to do.
Incredibly, it also emerged that Mr Henderson has been with the same insurance company since 1951, when he bought his first house. He had taken out the policy after a recommendation by his original mortgage provider, the Halifax, and has never switched. Believing that the RSA had his best interests at heart, he says, he was happy to renew every year until his daughter’s intervention. A look at the insurance schedule shows his premium was actually £865 a year (he lives alone in a two-bed bungalow) which, after a discount, was reduced to £648.
The maximum amount the policy would have paid out for all his belongings was just £41,374 – which may not have even been enough had a fire gutted his home. The maximum, if he had to move out while it was repaired following, say a flood, was just £8,275 – hardly enough to hire a similar property for a year. “When I rang RSA to find out why my father was paying so much, and to say that he would not be renewing, he was immediately offered a further 20%, which, to me, is an admission of overcharging, but it would have still been far too high,” says Elaine.
Mr Henderson keeps a careful record of his payments for various policies. What they show are small price rises until 1990, when they began to increase dramatically. Elaine says that a rough calculation shows that since then he has probably overpaid by £3,500, an amount she has since asked RSA to repay as a “gesture of goodwill”.
“As far as I am concerned it is sharp practice. The premium has simply been raised each year without any regard as to the risk. I would say to anyone else with elderly parents/relatives to take a look at what they are paying because to me this is outrageous.
“These companies are taking advantage of their oldest, and probably most loyal customers, and are milking them. Nothing less.”
A spokesman for RSA was this week maintaining that the policy was “correctly priced”. “It dates back to the 1950s, at this time the method for calculating premiums was far less sophisticated than it is now,” he says. “The new quote referred to in Mr Henderson’s complaint, is for a completely different product with different levels of cover and, as such, comparing the two prices is like comparing apples with pears.
“For example, the original policy includes cover for accidental damage and personal possessions outside the home, whereas the new quote does not. Both of these would increase the premium on the new policy quote if included.
“Furthermore, like many insurers, we offer introductory discounts to attract new business and the new quote benefits from this.”
The company said that, having reviewed the case, it would “not be offering any refund”.
Meanwhile, Mr Henderson remains sanguine about the affair.
“I should have known better, I suppose, but I trusted the company and assumed, wrongly, as it turned out, that they would look after their loyal customers,” he says. “In 58 years I only made three claims, and they were for tiny amounts – the last was for around £20, I think, so they’ve done all right out of me.”
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Posted in Home insurance, Insurance, Money | Comments Off