Damning report calls for home insurance policies to be clearer and more affordable
'Meeting the challenge of the consumer to be fair,' argues a new report, 'requires a revolution.'
Simon Read is Personal Finance Editor at The Independent. He edits the Saturday Your Money section and writes the Daily Money column and Wednesday’s Midweek Money section in i newspaper. He also writes for the news and business pages of the Independent and i newspaper and is a regular money commentator on TV station London Live. He has won numerous awards including Consumer Finance Journalist of the Year.
Friday 16 May 2014
Home insurers should offer fairly priced policies so consumers are not forced to shop around and switch every year. They should also clean up their small print and stop hiding key facts in it.
That's the conclusion of a damning new report on the industry that says it's time for a revolution where consumers are actually provided with some clarity about policy wording and prices.
Ian Hughes of Consumer Intelligence, the "mystery shopping" firm that produced the report, said: "Consumers want clear, simple insurance written in plain English, with no weasel words, and sold in a simple and fair way with the best cover and best prices going to the most loyal customers.
"Meeting the challenge of the consumer to be clear, fair and loyal requires a revolution on an industrial scale."
The report reveals that consumers would welcome the introduction of basic, affordable home and contents insurance at around £75 a year – to help low-income families pay for policies.
That would help fill the gap highlighted by data from the Association of British Insurers, which estimates that one in four households have no contents insurance.
Consumers are also fed up with pricing tricks such as not offering the best deal at the start. More than a third believe insurers often offer a price that can be reduced through haggling. "Policyholders would rather build and maintain a relationship with one insurer that works on both sides, to avoid the hassle of switching," said Mr Hughes.
Consumers would also like insurers to offer discounts to those who have more than one policy with the same provider. Others suggest discounts should be given to those who keep their property well maintained or work from home.
Responding to the report, Kate Syred, home commercial director at Direct Line Group, one of Britain's biggest home insurers with 17 per cent of the market, said the firm has already reacted positively to consumer demand.
"Last November, we over-hauled our home insurance policies," she said. "We spoke to our customers to find out what they valued – and have made home insurance simpler and more aligned to our customers' needs."
The company has simplified excesses and doubled cover limits on some policies to reduce the risk of underinsurance.
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