Insurers are ripping-off Ellesmere Port and Neston drivers by £2m MP Justin Madders believes.
He points to research which shows insurers are automatically renewing the policies of ‘thousands’ of drivers in the constituency and that overall Ellesmere Port and Neston drivers could save £2m by not being auto-renewed.
Mr Madders has called on insurers to stop what he describes as ‘the auto-renewal rip-off’.
With the Financial Conduct Authority set to report within weeks on the use of auto-renewals in the motor insurance market, the MP says he is taking action to save local drivers an estimated £2,035,640 on their car insurance.
Research by price comparison website MoneySuperMarket is said to show practices used by many insurers make it harder for consumers to get a better deal. Mr Madders is calling on the regulator to require companies to clearly ask consumers whether they want to opt-in to auto-renewal when they first buy their policy.
'Poor practices of insurers'
He has expressed serious concerns about the ‘poor practices of insurers’ as the report reveals that people often have no idea that they’re agreeing to auto-renewal when they first buy their policy and would have no way of opting out even if they did.
When renewal time arrives, the letter or email they get from their insurer can be confusing and misleading and even conceal significant changes to their policy he suggests.
Cancelling an auto-renewed policy can be difficult and costly he believes with some providers charging cancellation fees or driving customers to expensive premium rate telephone numbers.
Most insurers do not provide online cancellation despite allowing customers to buy their policies online in the first place.
Calling on the Financial Conduct Authority to take decisive action to stop auto-renewal he said: “It’s unacceptable that drivers in Ellesmere Port and Neston are losing £2m because of unfair practices by the insurance industry. This is money that many can’t afford to waste.
“The regulator must take decisive action to put drivers back in control of their insurance. People shouldn’t have payments taken automatically from their accounts unless they have given their explicit consent. Insurers need to do more to ensure it doesn’t happen.”
Dan Plant, editor-in-chief at MoneySuperMarket, said: “As our report lays bare, auto-renewal is far from fair, it reduces proper competition and ultimately costs consumers big money.”
He argues insurers can make the auto-renewal process fairer and clearer, helping customers to save money through simple changes such as writing renewal notices in plain English, asking consumers to opt-in to auto-renewal when they buy their policy and providing a click-through cancellation button on renewal emails which will help drivers to make sure they are not paying more than they need to.