Why are car insurers charging careful older drivers boy racer rates?
dmg media (UK)
Wealth & Personal Finance
WE WILL know on Wednesday whether the Bank of England is winning its battle to tame inflation – when the figures for August are published. All the mood music suggests it has more hard work to do with inflation likely to top July’s rate of 6.8 per cent. If so, this will probably result in yet another interest rate rise being ordered a day later by the Bank’s Monetary Policy Committee – the 15th since December 2021, with the new rate set at 5.5 per cent. One area of our financial lives where inflation remains very much untamed is in the home and motor insurance markets. Some of the premium increases being demanded by insurers when policyholders’ cover comes up for renewal are off the scale – and in most (not all) cases, it is the elderly who are being hit with the most savage hikes. In the past few days, I have spoken to numerous car owners and homeowners who have received such renewal notices. All are either 80 years of age or over. For example, Jim Moir, an 80year-old retired technical services manager for a brewery company, renewed his car insurance last November with Saga for just under £313. Reassuringly, the premium was fixed for the next three years. ‘I was so happy,’ says Jim, a widower from Dundee. ‘I have home insurance with Saga and a relationship with the company going back 18 years.’ Earlier this month, he changed his car from a three-year-old Mazda3 GT Sport to a brand new Mazda3 Takumi – almost identical cars. He contacted Saga, only to be told he would have to take out new cover, costing £1,150 – nearly four times the previous price. He was perplexed. ‘Apart from the car and myself being one year older, nothing has changed since November,’ he says. ‘I still drive no more than 5,000 miles a year and I have 20 years of no-claims bonus under my belt.’ Complaining got him nowhere – and he is now insuring with another leading brand for £648 (for one year, not three). There are other examples. Dave Thomas, an 83year-old retired bank manager, sought new cover for his MercedesBenz GLE in July this year after his existing insurer said it would not be offering him the chance to renew. Why? The value of his car, he was told, and his age. He has now found cover elsewhere for £3,500. ‘It’s not just the Mayor of London taking car owners to the cleaners,’ he says, ‘It’s insurers as well.’ David Gorman, from County Down in Northern Ireland, was told last month that the cost of his home insurance would be rising from £298 to £1,239, fixed for three years. ‘In more than 50 years of having home cover, I have never made a claim,’ he says. David is 81. Age is one of the factors that insurers use to assess risk and price cover, so companies are not falling foul of age discrimination rules. But is a driver just one year older really deserving of an increase more suited to a reckless boy racer? Insurers’ treatment of many elderly customers is nothing short of shameful.