Direct Line Group to pay £30 million in refunds after overcharging some car and home insurance customers – what you need to know
If you've renewed your Churchill, Direct Line or Privilege home or car insurance since 1 January 2022 you may be owed a refund. This comes after Direct Line Group, which all three brands come under, flouted rules designed to prevent loyal customers from being charged more than new users.
Below we take you through what went wrong, who's impacted and how refunds will be paid.
Direct Line Group overcharged renewing customers
On 1 January 2022, regulator the Financial Conduct Authority (FCA) banned home and car insurers from charging existing customers more at renewal than they would expect to pay when taking out a new policy with the same firm. Before these rules were put in place, many insurers hiked prices for existing customers – this was known as the 'loyalty penalty'.
According to Direct Line Group, an error in implementing these rules across its three car and home insurance brands resulted in some customers paying a higher renewal price than they should have. The insurer is now reviewing all home and motor insurance renewals made since the FCA rules came into place.
It's unclear at this stage exactly how many customers are impacted, though Direct Line says the majority who have seen an increase to their premiums were not overcharged.
Green Flag is also part of the Direct Line Group but it only sells breakdown cover, which isn't protected by the FCA's renewal pricing rules, so these customers are not impacted by this error.
You could be due a share of £30 million, though most don't need to do anything
Still a customer of Churchill, Direct Line or Privilege? The insurer says if you're affected you'll be contacted directly through the method it normally uses.
If you are no longer a Direct Line Group customer, you'll be contacted using the information on file for you. Direct Line Group told us it will use "all available avenues" to trace people, including using third party data suppliers.
The cost of reimbursing affected customers will be around £30 million, the Direct Line Group currently estimates. If you are affected, you will be refunded the difference between what you paid and what you would have paid as a new customer, plus 8% interest. This will be paid by bank transfer or, if the insurer does not have your bank details, you will be sent a cheque.
What does Direct Line Group say?
A spokesperson for Direct Line Group said: "We have always sought to operate within the FCA’s pricing rules. What has become clear from our engagement with the regulator is that there are a group of customers who may have been incorrectly charged. Work is already ongoing to confirm these customers, so we can apologise and refund any money owing to them as quickly as possible."