Welcome to the great home insurance swindle

There can be no argument that the home insurance industry is engaged in the cynical exploitation of elderly customers, writes Patrick Collinson.

The evidence is overwhelming – just look at the letters below. As is the fact that every company – mutual, cooperative, shareholder, specialist – is in on the game. They have all been seduced by a business model which amounts to offering a teaser rate, then stitching up unsuspecting older customers for years afterwards with absurd premium increases.

When the cry goes up of “How do they get away with it?”, the answer is simple: because they can. There is nothing illegal going on, after all. Every customer has the chance to reject a premium and shop around for a better deal.

But it is fatuous to suggest a 92-year-old with arthritic fingers and macular degeneration should be surfing comparison sites through an iPad app. More importantly, I wonder if these companies really are within the law. Customers are told at renewal that they are, once again, enjoying a “competitive” deal with “great value” insurance. But when an insurer claims this while charging £700 for a policy that costs £150 somewhere else, it’s a lie. And under the Consumer Protection from Unfair Trading Regulations 2008, deliberate mis-selling like this is a criminal offence.

The law states that a commercial practice is a misleading action if it contains false information likely to deceive the average consumer and make them take a transactional decision they would not have taken otherwise. Specifically, regulation 5 (4) (g) and (h) talk about “the price or the manner in which the price is calculated” and “the existence of a specific price advantage”. Assuming someone is charged £700 for a premium that is £150 elsewhere, and assuming the seller has said it is “competitive”, then arguably a criminal offence has been committed.

Insurers who simply send out a renewal quote on a “take it or leave it” basis are probably within the law. But if they throw in misleading statements about value and price then they are almost certainly crossing the line. The Financial Ombudsman Service should be coming down hard in this area.

The regulators know this whole area is a dog’s dinner. Indeed, the Financial Conduct Authority has proposed remedies such as forcing insurers to include wording in renewal letters which will say something like: “Your quote this year is £200. Last year’s premium was £150. This is £50 more than last year. Shop around for the best deal.”

They should go further. Since March 2014 the energy companies have been forced, by a Conservative government no less, to display on their bills personalised information on the cheapest tariff they offer. Let’s apply this thinking to home insurance with a requirement to tell the householder what they would pay if they were a new customer. So a bill would say: “Dear Mr Smith, your buildings and contents renewal is £702. If you were a new customer we would charge £146. If you would like to switch to this rate, please call …”.

Pretty soon teaser rates followed by rip-offs would disappear. Real loyalty discounts may even appear – and we’d have a cleaner insurance industry.

My 85-year-old mother saved £550 after reading your column

My mother, who is 85, lives alone in a three-bedroomed terraced house in Leamington Spa, but I live in Germany.

She has been paying almost £700 per annum for home and contents insurance with Lloyds Bank, to whom she had remained loyal for 30 years. In that time she never made a single claim. But both she and I had naively believed that Lloyds could be trusted and she was being charged the going rate. However, alerted by your column we switched to esure where the premium was just £144.32. Had we not, Lloyds would have undoubtedly hiked the premium yet again.

I should have realised that Lloyds is now very far from the bank we used to know back in the 1970s when the local manager was a family friend and handled all our financial affairs when, in January 2007, my mother was given a three-year loan from the bank to pay for a new boiler, and also came back with a Lloyds platinum card costing her £26 per month for which she could not possibly have had any use. JB, Germany

Shocked by Nationwide’s premium for a 90-year-old

My elderly next door neighbour is a sweet lady but has never been very good with money. Now in her dotage – she is 90 years old – she doesn’t understand it at all and is therefore very vulnerable.

After her power of attorney disappeared off the scene, along with some of her money, she had to pay her house insurance bill herself over the phone. So she asked me to help her and pay it by debit card. I was shocked to see that she was paying almost four times as much as me, and yet our houses are identical. And this was Nationwide building society, who I always thought were fairly ethical. Shame on them. VF, Barnet

Lloyds charged 97-year-old £1,000 for a small bungalow

My 97-year-old mother lives in a three-bedroom bungalow just outside London. Like many of her generation she assumed her insurer, Lloyds, would give her a fair renewal premium, and so had unquestioningly paid up for years when her renewal notice arrived.

She asked me in December 2014 if I felt that her latest premium of £1,089.95 was reasonable for house and contents. Not surprisingly, I didn’t. It was three times what I pay for a larger house. She had made no claims for many years.

My sister popped over, entered the property details on a comparison website and came up with a more reasonable £247.84 on the same terms, which my mother went for. The new insurer? Lloyds Home Insurance. NS, Berkshire

My premium went up 1,184%

My sister and I own a cottage as a second home inherited from our parents. For some reason neither of them had bothered to insure it, and so when it passed to us we looked to put at least buildings insurance in place. We found very few insurance companies willing to insure it, including the companies which insured our own homes. However, a firm called Home Protect would and in November 2012 charged us £195.92 for buildings cover, with an increase of 3.6% and 5% for the following two years.

I then received a letter to advise that the cost for 2015-16 had increased by a staggering 1,184.5%, having risen from £213.12 to £2,737.51. I was advised that this was because our property was now classified as being “at higher risk of flooding”. The cottage is located close to the sea (the Forth Estuary), but no properties in the area have ever been flooded as the sea simply cannot reach that far and our house is on a hill. It seems the current preoccupation with flood plains is an excuse for some companies to impose a blanket increase in cost on any property close to a river or the sea.

Needless to say we did not reinsure with Home Protect. We switched to Intelligent Insurance and got the same cover for £199.98. FR, Scotland

We were charged four times the price elsewhere

I admire your campaign against rip-off home insurers. I switched buildings and contents from Saga to Prudential in July 2015. Saga was quoting £607.55; Prudential gave me not much less for £139.92. Quite a difference. My suspicions had been alerted by Guardian reports that these insurance premiums were falling due to fewer burglaries etc.

The Saga premium rose from £429.15 in 2013, an increase of nearly £200. It is particularly disappointing since Saga is supposed to look after us oldies. I am 70. What has happened to integrity? WC, London N10

Saga doubled our premium in five years

We renew our home and contents insurance on 1 January each year. We are in our late 60s and own a very small three-bedroom semi built in 1926. After we paid off the mortgage in 2000 we insured with Direct Line, as we already had motor and breakdown insurance with them. By the time we retired in 2006-7 their premiums had risen so we looked elsewhere. We changed to Saga, which was able to offer us a more modest deal, who we have remained with.

Because of broader family commitments, for a few years we did not have the headspace to embark on comparing premiums – but we really woke up last month when Saga quoted us £630 for 2016. My records show our premium has crept up steadily: £306 in 2010; £381 in 2011; £440 in 2013; £499 in 2014; and £556 in 2015. We note that with this policy there were no excesses. We have also never made a claim and are not in an area which has flooded. A conversation with Saga resulted in the offer of a lower premium of £590.

Now we have returned to Direct Line. There are several excesses, but we are happy with those. It is a comparable policy and there is a discount because we are existing customers. The premium was £186. We await next December’s renewal invitation with interest! HK, Kingston upon Thames

RIAS charged loyal customer £395, but new customer £143

I’ve had an experience with RIAS very similar to one you reported last week.

My renewal notice for 2015-16 showed an increase from £273.32 to £395 – a 44.5% rise! I rang RIAS with another query, but within seconds the operator said “Oh, I think there’s a mistake, we’ll ring you back.” It did, and reduced the premium to £251.72. In my subsequent correspondence RIAS said the initial “error” was because they hadn’t registered the fact that I had informed them I was now retired. That still means, however, that the premium would have nigh on doubled had my circumstances not changed.

My real beef, though, was that in my annoyance over such a practice I went to an online comparison site and found that I could apply for an identical RIAS policy as a new customer for £142.80 – £108.92 lower than the revised quote I’d received, and £252.20 lower than the one it originally quoted me.

Needless to say, I let them know what I thought of their attitude towards loyal non-claiming customers. I expressed my personal opinion that they were taking advantage of the fact that many existing customers are elderly and not perhaps so clued-up or able to challenge the premium every year.

Their response made it clear that the onus was squarely on the policyholder to try to obtain the best premium. I think I can paraphrase it as “tough”! AB, name and address supplied

Thank you – I’ve saved £933

Thanks to your Guardian column I have saved £933.08 on my home insurance for 2016. A summary of the story: since 2005 I have been with the same insurer, originally as Allianz Cornhill and now Allianz Insurance plc through Home and Legacy Insurance Services Ltd. It’s possible I started before that, but 2005 is how far my records go back.

The buildings and contents have not changed, though house prices have gone up. In 2005 the premium was £761.88; in 2016 they were asking for £1,604. I have just been given a quote from a very reputable insurer for £670.92.

My premium is higher than normal because I run a part-time therapy practice from home and have four tenants – it is a big house with 13 rooms plus kitchens and bathrooms.

So, thank you – I feel liberated from the chains of exploitation. This has also given me the confidence and energy to examine other “habitual” company loyalties I hold. I am 71 so am in the category of the exploited aged – not so aged when I’m not being exploited! VB, Warwick

Illness in the family meant I didn’t spot premium increases

Last year my husband was terminally ill in a hospice, so I continued paying the premiums on our house insurance, not feeling able to try to find another quote. He died in August and I have just received a renewal notice from Nationwide stating that the premium has now increased to £598.97. We have been insured through Nationwide for at least four years. When I went on a comparison website and entered all the details the quote from Nationwide was £244.18. Needless to say I’m not renewing. PS, Manchester

Saga doubled our premium in just 12 months

We have a 200-year-old stone cottage in Derbyshire, so it’s not standard. We can’t get online quotes and have to speak direct to a company. We’ve been in the house seven years and haven’t made a claim in that time.

For the past few years I’ve alternated between Saga and Co-op for home and household insurance. After a few years they try to push the premium way up so I swap provider. In general we’ve paid around £400-£600. But this year’s offering beat all previous efforts.

Last year we were with Saga and our premium was £561.30. When the renewal forms arrived this year it was asking for £1,104.58 – roughly double. I rang up and said “You must be joking – reduce this dramatically or I go elsewhere.” The call centre operative said he couldn’t do anything and made no effort to even try. So I rang up the Co-op. They still had my details from previous years, so it was easy to confirm that nothing much had changed. After a bit of discussion and minor tweaking of excesses I’ve got almost identical cover to what Saga was offering – for £329.83. Less than I’ve paid in seven years. PB, Derbyshire

Thanks – you’ve saved my mum about £425

On the same day your article on RIAS was in the Guardian my elderly mother’s renewal letter arrived. My late father had always dealt with all things financial, but having read your article I checked through Mum’s account with her to find that RIAS had been steadily bumping up her premium from £195.23 in 2013 to £576.52 for this year’s quote. I did some research and found identical cover for just under £150! So thank you very much for bringing RIAS to my attention – you have saved my mother, who is in poor health, over £425.

When I phoned up RIAS to cancel I got the feeling from the lady on the end of the line that your article might have caused them to be inundated with callers taking their loyal custom elsewhere. AK, Warwickshire