Admiral auto-renewal letters over-stated how much customers paid

One MoneySaver was told that 'last year's premium' was £231, and was set to auto-renew before spotting a disclaimer that this figure did not include discounts. It turned out the actual amount he had paid was just £162 - meaning his premium had been increased by much more than he initially realised.

New rules brought in by the Financial Conduct Authority on 1 April mean insurers who want customers to renew their policy must tell them what they paid last year, so they can more easily spot price hikes.

But Admiral has admitted some of its customers who are on an older IT system are being sent letters showing the original quote they were given and not the discounted premium they actually paid, though it insists it is complying with the FCA guidelines.

The insurer told MSE "several thousand" customers who took out policies prior to February 2016 were still on the old IT system, though it wasn't able to say how many of these have been sent renewal letters since 1 April or what proportion would have paid discounted premiums.

The message from MoneySavingExpert.com has always been that you should NEVER automatically renew with the same insurance company, as the best deals are often for new customers. See our Cheap Car Insurance and Cheap Home Insurance guides for full help.

'After checking, the rise was actually nearly 60%'

John Cain, from the Isle of Man, received a letter from Admiral on 2 May about auto-renewing his car insurance policy.

The letter, seen by MSE, says: "Last year's premium: £231.00. This is the premium we would have offered you last year, but is calculated using your current policy details. Please note that this figure may not take into account any discount we have offered you."

John said: "I almost allowed my Admiral car insurance policy to auto-renew at £257 - a modest 11% rise on last year."

However, when he looked back at his records, John found that the figures quoted in the auto-renewal letter didn't tell the whole story.

"After checking, the actual amount that I paid them last year was £162, so the rise was actually nearly 60%," he said.

"I don't think the FCA intended the new requirement to act in this way. I wasn't impressed with the way they have represented the rise and I complained about that. Needless to say, I'm now insured elsewhere."

He added: “My problem lies with comparing what I paid last year to the renewal premium. I never bought a policy based on their stated "last year's premium" so why would I want to compare it to this year's renewal price?”

Admiral auto-renewal letters over-stated how much customers paid

What Admiral says

An Admiral spokesman told MSE that John had originally been offered a quote of £231, but after speaking with them on the phone he had secured the cheaper £162 price.

The spokesman said: "We are sorry Mr Cain feels our letter is misleading and isn’t in the spirit of the FCA’s new guidelines on renewal documents. This is certainly not our intention.

"The reason the letter sent to Mr Cain displayed the original quote and not the discounted premium is due to changes within our IT system. Within the last year we have moved [to a new system]. The way these two systems calculate premiums is different."

Admiral says that customers who took out policies before February 2016 are still on the older system, which results in auto-renewal letters showing the premium originally offered. If the actual amount paid was different - for example, if a discount was applied or the customer had haggled a better deal - the computer system would not be able to save this information.

These customers are in the process of being moved to the newer system, which records the premium as the figure actually paid by the customer, the spokesman said.

He added: "For this reason we have added a sentence to our disclosure wording on the renewal notice to highlight the fact that discounts may not be included. We believe our renewal notifications are within line with FCA guidelines, but all staff are trained to deal with any queries and questions from customers who contact us regarding this. This is only temporary until all policies are on the [new] system."

What to do if you're affected

If you're an Admiral customer who's recently received an auto-renewal letter, it's worth carefully checking the 'last year's premium' you were quoted, to see if it is actually the amount you paid. Admiral told MSE that its renewal notice letters are sent out three weeks before a policy's renewal date. If a customer chooses not to renew their policy before the end of the three weeks there is no charge.

If you've auto-renewed since last month, it's been more than three weeks than you did so and you believe the figure on your letter was wrong, you can try complaining to Admiral. It told us: "If anyone has renewed and is unhappy with how it has been presented, we will discuss it with them on a case by case basis."

Most other firms DO show the actual price you paid

MoneySavingExpert.com spoke to a number of other major insurers to find out what price for last year they show on their auto-renewal letters.

Aviva, Axa, Direct Line, Hastings Direct and LV all told us they list the actual price the customer paid, unless any changes were made to the policy mid-year that could impact the cost of cover, such as moving address.

Zurich told us that in the first few weeks after the FCA rules came in the firm had been alerted to a "small number" of cases where customers' renewal quotes inaccurately showed what they had paid 12 months ago.

A Zurich spokesman said: "This was attributed to the way the system was pulling through pricing information and it wasn't always corresponding to the actual price paid the previous year. Happily, the process was fixed swiftly and all customers now see their new renewal price alongside the accurate figure for their previous year's insurance."We are committed to making the process of renewing insurance as straightforward and transparent as possible - so this initial glitch was unfortunate but one we identified and remedied quickly."

What does the FCA say?

The FCA declined to comment on the Admiral auto-renewal letters and would not say whether they conformed to its renewal transparency rules.

But a spokesman said: “Our new rules are designed to make renewal prices more transparent for consumers. Insurers must disclose last year’s premium at each renewal in a way that is fair, clear and not misleading.

"The actual final amount paid in the previous year should be set out in a way that is consistent with the presentation of the renewal premium so that the consumer can easily compare the two.”