Warning: 'Pet insurance renewal up £2,000'

Between 1 September 2014 and 30 August 2015, all of AXA's 10,000 pet insurance customers with policies up for renewal will have, or have already had, their policies renewed by NCI after AXA decided to cull its pet insurance business to "concentrate on its key products – motor, home and travel".

Linda Cole is one such customer hit by NCI's price increases. The 36-year-old, who runs a ferret rescue centre in Kent, paid AXA £636/year to insure her 10-year-old golden retriever Millie.

But when Millie's policy came up for renewal, NCI said the new policy would cost a whopping £2,740/year. Linda says this was beyond her means, so she had no choice but to take out a cheaper policy elsewhere, even though it wouldn't cover Millie's pre-existing medical conditions.

Linda says: "Obviously this means a death sentence to many pets insured under AXA who have now been priced out of the market due to these huge premium increases."

NCI says it will provide "similar levels of cover" to AXA and will continue to insure any medical conditions identified while customers were with AXA under the terms and conditions of the new policy.

However, while some customers have reported increases in line with what they've received in the past from AXA, others such as Linda say that continued cover for pre-existing medical conditions in particular comes with such a huge price tag it is no longer affordable.

NCI blames prices rises on an increase in vets' fees and on a rise in the frequency of claims being made by customers. But if you think a price rise is unfair, complain to the provider and if still no luck, to the Financial Ombudsman Service. See our Financial Rights guide for more on what the Ombudsman does and how to complain to it for free.

Linda adds: "The contact from NCI has been terrible with a written quote arriving long after the insurance renewed, not to mention it all being done automatically, and it setting up a monthly payment without our consent and without us signing anything."

She is not the only customer to have concerns about NCI's administration – other MoneySavers have also reported having payments taken from their account by NCI despite not agreeing to renew with the firm.

'Caused a lot of distress and heartache'

Cassie Hagger, a 26-year-old trainee management accountant from Hull, has also been hit by AXA's move to pull out of the market. Her two English springer spaniels, three-year-old Ben and four-year-old Charlie, had both been insured by AXA.

When Cassie was first told that AXA was pulling out of the pet insurance market, she insured Charlie elsewhere as he had no pre-existing medical conditions.

But she kept Ben, who does have pre-existing conditions, with AXA as his lifetime cover policy insured these ailments year after year. However, in September 2014 Cassie was told the "devastating" news that Ben's premium would be increasing from £357/year to an eye-popping £1,927/year.

Cassie says she felt she had no choice but to renew Ben's policy with NCI as she knows other insurers won't cover his medical conditions, but she has had to put her wedding on hold to pay for the policy.

She adds: "This whole situation has caused us a lot of distress and heartache, and we signed up to AXA paying a premium price over other insurances available in order to get the peace of mind we wanted and lifelong cover. We have not been treated fairly in this matter."

Cassie's dogs, Ben and Charlie (source: WP Studio)

Unhappy with your new premium? Complain

Martin Lewis, MoneySavingExpert.com founder and editor in chief, says: "Unfortunately, price is not something that tends to be dictated by financial regulations. However, you do have a right to be treated fairly.

"If your price has gone up an astronomical amount and you can't ditch and switch because your pet has pre-existing conditions, my suggestion would be to make a formal complaint based on unfairness, and ensure the insurer knows you are taking this seriously and will go to the Ombudsman if necessary.

"Hopefully the potential time and cost of the insurer having to deal with an Ombudsman complaint will make it see sense and come back with a midway ground. However, unfortunately, in these types of cases there are no guarantees."

See the Financial Ombudsman's website for more information on how it views complaints about pet insurance providers, and see our Financial Rights guide for more on what the Ombudsman does and how to complain to it for free.

What do NCI and AXA say about the price rises?

AXA says when it pulled out of the market it ensured NCI would provide "comparable cover/sums insured in addition to providing cover for ongoing and existing claims". However, it says it can't comment on NCI's pricing structure.

When MoneySavingExpert.com questioned NCI about its prices, its MD and co-founder, Neil Richards-Smith, said: "It is true that some customers have had price increases compared to their premiums a year ago.

"Unfortunately, premiums across all pet insurers are rising; this is due to an increase in charges made by veterinary practices and an increase in the frequency of claims. It is likely premiums would have risen this year regardless of the insurance policies being transferred to NCI.

"In both these cases, the increase in premium could be attributed to a number of factors which includes the number of claims made and the medical history of the pets.

"The increase in premiums for Ben would be attributed to the value of claims made over the last two years across three separate conditions which has resulted in 27 claims amounting to over £5,000 including an ongoing cost for hip dysplasia.

"The value of Millie's claims aren't quite as high but there have been ten claims for six separate conditions in the same period. We firmly believe that our pet policies offer good value for the level of cover and service we provide. We also are committed to protecting our clients and their much loved pets for the long term."

According to figures released by the Association of British Insurers this week, the average cost of a pet insurance claim rose 7% in 2014 compared with the previous year to £679, while for dogs it was even higher at £683.

But the association adds that millions of people don't have cover for their animals. See our Pet Insurance guide to get the best deal for your pet.

And what about policies being automatically renewed?

On the issue of NCI automatically renewing policies and taking payments before renewals have been agreed, it says anyone with an AXA pet insurance policy where the renewal date is after 1 September 2014 will be contacted by NCI around 19 to 21 days before the policy renewal due date to be told of the new price of their annual premium.

If NCI doesn't hear anything from you, it will automatically renew your policy and begin taking your monthly instalments. Instalments are taken under a Close Brothers agreement and will be the annual policy cost split into 12 monthly payments. NCI says there's no interest or fees applied and you will not be credit-checked for this or have this listed as a loan on your credit file.

NCI says it does this to "ensure continuity of cover" as "any break in cover on a lifetime pet insurance policy would mean that a new policy would need to be set up which wouldn't cover any previous ongoing conditions". It adds that this also prevents potentially "great anguish and cost for a customer if their pet falls ill during a lapse in insurance cover".

If you want to continue your cover with NCI but you don't want to pay by monthly instalments, you can pay the entire annual premium upfront via debit or credit card.

If you're unhappy with the new premium and no longer want the insurance, you have a 14 day cooling-off period to cancel the policy free of charge after its renewal. You will also be refunded the payment taken.

NCI says former AXA customers who forget to cancel their NCI policy within the 14 day cooling-off period can still do so without being charged, but they'll need to provide evidence of a new alternative policy being in place. You'll also be refunded any payments taken.

If you incur any additional fees, for example bank charges, when you weren't expecting the renewal amount to be debited, get in touch with NCI. It says that it will look at these complaints on a case-by-case basis and that it has already agreed to pay bank charges to a "minority" of customers who have been in touch about this already.

NCI has a Q&A on its website with more information for AXA customers.