The Financial Blog

Age discrimination rife within motor insurance and travel insurance

- Equality Bill published today allows insurers to price policies based on age
- Travel insurance 100 per cent more expensive aged 66 compared to aged 65
- ‘Boy racers’ see an overnight drop of 52 per cent to motor cover cost aged 18

With the Government’s Equality Bill published today and ‘appropriate age-based treatment’ allowed, research from www.moneysupermarket.com finds Brits will continue to be punished with high travel and motoring premium costs on the grounds of their age.

Travel insurance - the overnight price hike when you turn 66 years old

The UK’s leading price comparison site looked at how the cost of travel insurance changes for Brits on their 66th birthday.  Those travelling within Europe or long haul can expect to fork out more than double for an annual multi-trip policy when they turn 66 - an increase of 106 per cent.1

Maxine Baker, travel insurance manager at www.moneysupermarket.com, said: “Brits turning 66 will be shocked to see an overnight hike in the cost of their travel insurance, with no further medical evidence to suggest they might be at higher risk.  Now that the Equality Bill has sanctioned ‘appropriate age-based treatment’, it means some travellers will continue find their premiums rise considerably on their 66th birthday. I had hoped to see a distinct shift in insurers’ attitudes towards older travellers, but the new Bill just means insurers can continue to class older travellers as higher risk.”

Motor insurance - younger drivers face a rough ride

Despite older Brits facing overnight price hikes for travel insurance, this is not the case for motor cover, with sixty-something drivers seeing only a gradual increase in the cost of their motor insurance premiums.

The story is different for younger drivers. A 17 year old male living in Lancaster will find car insurance costs an average of £3015 a year - 52 per cent more than if they wait until they turn 18 when the cost of the policy drops to £1,453. There are more savings to be made if they wait until their 19th birthday, when cover only costs £800 per year.2

While female younger drivers getting behind the wheel often find their premiums are cheaper compared with their male counterparts, the price differences per year are no less stark. A 17 year old female driver can expect to pay £1943 a year on average - 57 per cent more than an 18 year old when the cost of policy falls overnight to £843. 3

Steve Sweeney, head of motor insurance at moneysupermarket.com, said: “Using age as a broad brush for evaluating risk has been a bugbear for older travellers and younger drivers for years. With the Equality Bill stating that ‘an insurer can lawfully quote higher motor insurance premiums for young men’, insurers will continue to use age as a legitimate form of risk assessment. Ultimately, I think people should be treated fairly based on their own individual risk profile.”

Steve Sweeney added: “It is surprising these overnight price fluctuations still occur. Young and newly qualified drivers have long been perceived as high risk by the insurance industry and often find it hard to get competitive motor insurance. There is no doubt that the curse of the ‘boy racer’ lives on too; insurers view women as far more mature motorists at an earlier age.”

www.moneysupermarket.com offers the following tips to younger drivers to cut motor insurance costs:

• Shop around - The Association of British Insurers says you can save 35 per cent by comparing as few as five insurance providers.
• Buy online - Many car insurance providers offer discounts to customers that buy online.
• Mileage limit - Consider a mileage limit or to only drive at certain hours of the day.
• Car security - Make sure you have an alarm and immobiliser.
• Drive a car with a smaller engine - A newer, more reliable car that is less likely to be used by ‘boy racers’ will have a cheaper premium. Aim to drive a car like this for at least two years after passing your test - and forget about turbo-charged cars, with big spoilers, fat tyres, alloy rims and other “sexy” extras.
• Parents - If at all possible, avoid being added to a parent’s insurance policy. It prevents you from building up your own no-claims bonus. And if you are the main driver or registered keeper of the car, DO NOT insure it in your parents’ name and put yourself down as a named driver. This is known as “fronting” and in the event of an accident it could mean the claim is not paid. Moreover, the younger driver can be charged with driving without insurance.
• Pass Plus - This is a certificate where a young driver who has already passed his or her driving test receives specific lessons in night, motorway and town traffic driving; achieving Pass Plus can earn significant discounts (as much as 35%) on your car insurance.

Moneysupermarket.com compares over one hundred car insurance brands

• 103 motor insurance brands* are live on moneysupermarket.com
• moneysupermarket.com is the most comprehensive comparison site

Market leading price comparison site moneysupermarket.com now has 103 motor insurance brands available to compare in its motor insurance listings.

Andy Leadbetter, managing director of insurance at moneysupermarket.com said: “More customers choose moneysupermarket.com than any other comparison website. Our motor insurance offering remains the market leader with unbeatable comparison tools and user reviews.

“We compare more insurance brands than anybody else - 103 today but this total increases almost daily. Because we compare so many insurance brands customers can have confidence that they will find the best prices on moneysupermarket.com and also be assured that the price they see is the price they pay, we don’t add any fees or commission.”

Moneysupermarket.com was recently awarded the Hitwise Online Performance Award for having the biggest share of the insurance market, making moneysupermarket.com the number one insurance website in 2008.

Tescocompare.com urge young drivers to shop around for car insurance

New research from Tescocompare.com reveals that dispite the credit crunch parents are still offering financial support to their children when it comes to buying that first car.

Amazingly 6 per cent of parents said they’re actually going to save more and offer more financial backing to their children because of the credit crunch and 68 per cent said there were certainly not cutting back their financial support because of the credit crunch.

Debra Williams from Tescocompare.com said: “Clearly young drivers are lucky to own cars at a younger age and driving something more modern and reliable. But when it comes to car insurance premiums, if they don’t shop around for their car insurance, their luck can often run out. Whilst they may be saving money on the initial purchase, the fact that the vehicles they typically drive are higher in value could have an impact on the cost of their car insurance”.

“Shopping around is essential for this generation, especially as prices and policy features vary significantly between insurers. Comparing car insurance on a like for like basis, and not just on price, is an absolute must to ensure motorists get value for money. When it comes to renewing policies or upgrading to the next rung of the car ladder, coming back to a price comparison website to review the deals available ensures you get the best deal as a more experienced driver.

Simple steps to reducing the cost of insurance for young drivers:

• Look out for rapid bonus schemes that help you get your first year’s No Claims Bonus in as little as nine months - helping you get cheaper quotes in the future
• Consider if having your own insurance is the best route - you may find you can be on your parent’s policy but still be eligible for no claims bonus time under your own name
• Think carefully when choosing the make and model of your car - avoid modifications, opt for a smaller engine size, and a lower purchase value
• Consider if Third Party Fire and Theft insurance cover is suitable for your needs. This will cover you for other peoples’ claims against you, as well as for theft and fire of your vehicle. It doesn’t however cover damage to or replacement of your own vehicle
• Make sure you have an alarm for your car. A Thatcham approved security system reduces the risk of theft and may give you discounts on your insurance premiums
• Consider signing up for the Pass Plus scheme once you’ve passed your standard driving test and benefit from discounts offered by some insurers. Pass Plus is a certificate which gives you advanced lessons in motorway, town, night and all weather driving. For more information go to passplus.org.uk

Getting low cost car insurance is a must for everyone especially considering today’s financial climate. So if you’re in the middle of comparing car insurance quotes to find your next policy then consider Tesco car insurance; but you’ve only got a week to take advantage of this offer, so hurry!

Tesco offers a range of car insurance products from competitively priced fully comprehensive motor cover to Tesco ‘no frills’ Value Insurance or just basic third party fire and theft cover.

Tesco comprehensive car insurance cover gives you a range of choices so you can tailor the insurance cover to suit your needs. Tesco Value cover is still a comprehensive car insurance policy but with some of the addtional elements removed, so making it a cheaper fully comprehensive policy.

If you buy Tesco car insurance before the 1st April 2009 (and you need to be a Tesco clubcard holder) you’ll get £50 to spend at Tesco as long as you quote your Tesco Clubcard number when you call or go online to get your car insurance quote.

As a Tesco clubcard holder you’ll also earn 1 point for every £2 spent on your premium and/or you can use clubcard vouchers to pay for your premium AND all new customers get up to 15 per cent discount online in their first year.

Give Tesco a call today on 0845 301 0760 or logon to www.tesco.com - there are terms and conditions that apply so make sure you read through everything!

I’ve just seen an advert on TV for Direct Line. It’s the latest one where Direct Line offer 50 per cent off home insurance - I think it was 50 per cent off contents insurance to be more accurate.

 Now don’t get me wrong here, I’m all for discounts and offers and if people can change insurance providers and save a bit of money that’s great…

 So - Do Direct Line really think people are stupid enough to fall for their ‘we’re not on ANY comparison websites so we don’t pay them commission’ statement!!??

If Direct Line offer such a great price on insurance then surely they should be working with EVERY comparison website so they can show how competitivley priced their insurance really is?? HHhhmmm…

AND - how can Direct Line really expect us to believe that they can simply slash thier prices by 50 per cent JUST because they’re not on comparison websites…Personally I just don’t believe it and the whole advertising message here really winds me up!!

I’ve said it before so I will say it again now - insurance companies set their own prices; OK I admit that there is certain criteria which determines roughly how expensive or cheap your insurance will be. However, when insurance companies (and it’s not just Direct Line) offer ‘50 per cent off’ or ‘Free’ insurance and so on, how do you know it’s true? - 50 per cent off what? The insurance companies set the price in the first place so how can you really fall for ‘50% off’!?

Just use a few comparison websites, find a reasonable price and you’ll be making sure you are not paying above the odds for your insurance.

4×4s double in a decade

I don’t know why I’m surprised by this report from Diamond Insurance. EVery day I see more and more pointless 4×4 cars on the roads around where I live, Audi has recently opened a new showroom up the road and it’s stuffed full of Audi Q3’s and Audi Q5’s. I say pointless because the only reason people buy these cars is for status symbol reasons showing off to friends and nieghbours. If you actaully look at half of these 4×4’s closely the ground clearence alone is practically the same as standard ‘road’ cars, like saloons, hatchbacks etc. I wonder if any research has been done on the number of 4×4 drivers who go off road driving. I’d be surprised if it was more than 10 per cent.

Britain’s roads now seem to be dominated by people driving 4×4s, whose idea of off-roading is driving through some mud on a dirty road, in fact a new study shows that the number has doubled in the last 10 years. But who exactly is driving them all?

Women’s car insurance specialist Diamond looked at over 13 million vehicles driven over the past 10 years, and found that the number of 4×4s has more than doubled since 1998 and is showing no signs of slowing down, as it increased by almost 10% last year. The increase has been slightly higher for men than women overall, however, it’s no surprise to see that the biggest rise is for those drivers with children. Dads have seen an increase of 153% compared to mums with an increase of 166%.

Postcodes in the South East dominate the list of areas with the highest percentage of 4×4s*, with 8 of the top 10 postcode areas there, and 3 specifically in Kent. Ashford in Kent, Ongar in Essex and Banchory in Kincardineshire (near Aberdeen) contain the highest proportion of 4×4 drivers, but just outside the top 3 in 4th is Chelsea in London. All of the top 10 are more than double the UK average for 4×4 ownership of 6.65%.

Diamond managing director, Sian Lewis, commented, “I’ve definitely noticed an increase in the number of 4×4s on the road, but was really surprised to see that the number had increased so greatly. The South East certainly seems to be 4×4 central, and it’s good to see Chelsea in the list living up to its stereotype as the birthplace of the ‘Chelsea Tractor’.”

When it comes to the occupations, unsurprisingly farmers are the most likely to own a 4×4, however, they’re followed by child minders and property developers. Also in the top 10 are publicans, stockbrokers and housewives*.

Sian continued, “You’d expect farmers to be most likely to drive a 4×4 but for child minders to be second in the list emphasises how popular 4×4s have become away from what they were originally designed for. Many people see them as a practical way in which to ferry children around due to their size, and some people perceive them to be safer for passengers. They can easily accommodate plenty of children and all the paraphernalia they attract.”

What are all these 4×4 drivers behind the wheel of? The most popular is the Land Rover Freelander followed by the Toyota Rav-4 and Honda CRV, so it’s the smaller 4×4s that dominate:

1.Land Rover Freelander

2.Toyota Rav-4

3.Honda CRV

4.Land Rover Discovery

5.Range Rover

Good news for consumers here, Moneysupermarket.com has improved its car insurance comparison serivce by allowing 5 insurers to be compared side by side, including all the notes and benefits each policy offers.

This is something perhaps Moneysupermarket.com had lacked in the past and competitors like Confused.com and Gocompare.com often angled their PR towards the ‘compare policy benefits and not just price’ - now it seems Moneysupermarket.com has covered that angle off - now you can easily see price and policy benefits all on one page.

Personally I’m not really all that interested in anything than price and utlimately price will always be the overall deciding factor, for me. At least now if you are really interested in additional benefits you can check it all out before applying online…  Take a look at www.moneysupermarket.com

50% off Tesco Home Insurance - Don’t get me wrong any discount offer is worth looking into but I disagree with the way insurance companies are allowed to offer “50 per cent off home insurance” without quantifying it! 50 per cent off what? 50 per cent off my last renewal quote; I bet not! If insurance companies set the prices how do we know we’re getting 50 per cent off! - Simple answer - you don’t. Just make sure the quote is competitive and shop around…

Tesco Home Insurance has today launched a massive 50% discount offer for new customers on either Standard or Finest cover.

To take advantage of this offer customers need to obtain a quote before 7 January 2009 and then buy the quoted policy. Quotes are valid for 90 days.

Tesco has also announced today that it will give all of its contents home insurance policy holders a Christmas present. The company will increase the contents sum insured for all policies by 10% from 1 December to 15 January 2009 at no extra cost.

Jim Bruce, Head of Tesco Home Insurance, commented “This is a fantastic offer for our customers, especially in the current economic climate. This is also a great opportunity for our customers to save money in the run up to Christmas.”

Matthew Dransfield, at Tescocompare.com comments on today’s FSA announcement on insurance comparison sites:

“Tescocompare.com has been designed with the customer in mind and we therefore fully support the FSA’s findings. Our customers have asked us for a price comparison site that allows them to compare policy features and price across different providers in a consumer friendly way - and we have delivered exactly that. We believe that it is the price comparison sites’ responsibility to make sure consumers fully understand not only the price of their insurance policy but also the benefits and exclusions.

“Our comparison site is based on putting the consumer in control; unlike many other sites we do not make any assumptions on behalf of the customer; we provide quotes based on the exact details the consumer submits and we then allow people to compare the results on a like for like basis.  We believe that all financial comparison sites should be moving towards a model which goes beyond just providing a price comparison, therefore encouraging consumers not to compromise on cover.  Tescocompare.com actively encourages people to compare as much information as possible to make an informed decision on which product meets their individual needs.

“Financial comparison sites without doubt play a vital role in the purchasing of financial products and offer consumers a simple way of shopping around.  We hope the industry takes the FSA’s recommendations on board, moving away from being ‘price estimation sites’ in order to produce the most consumer friendly offering possible.”

Gocompare.com comments on FSA’s review of comparison sites

The UK’s leading car insurance comparison site Gocompare.com has commented on the conclusion of the FSA’s review of insurance comparison websites:

Hayley Parsons, chief executive of Gocompare.com said; “The comparison industry has embraced what the FSA is doing and the process has been beneficial to both the comparison sites and the consumer.  Gocompare.com has been regulated by the FSA from day one so we have warmly welcomed their most recent review and worked with them to ensure we are continuing to do everything we can to exceed their expectations.  We have had some very constructive meetings with the FSA and we will continue to work closely with them in future.” 

“The remaining issues highlighted by the FSA are industry-wide issues not just comparison site issues.  The issues around advertising, the use of assumptions in online quotes and the way excesses are displayed online apply equally if you are Direct Line, Norwich Union, Swinton or Gocompare.com.  In many ways Gocompare.com is ahead of the industry because we built all our systems from scratch two years ago.  But we need to address these issues as an industry, as consumers will not differentiate between one type of insurance website and another.”

“At this moment in time, we feel we have come as far as we can on our own.  We have never used assumptions to calculate estimated quotes – all of our quotes have always been guaranteed.  However, we would join the FSA in calling for insurers to play fair on excesses, for the benefit of consumers.  We depend entirely on insurers providing us with accurate information.  We would like to be able to show customers the level of voluntary and compulsory policy excesses separately to allow them to make even more informed decisions, but not all insurers provide this level of detail at the moment.”