Direct Line - where's the benefit ?

[Searcher]

Car insurance renewal is due again, and yet once more they've hiked up the quote 28% ! I have this every year, argue it out with them and then get a reasonable quote. But why should I have to do this - I'm a loyal customer for 9 years and they still can't be bothered to look after me and value a good customer with 9 years No Claims.

What really bugs me is they're spening big bucks saying they cut out the middle men - suggesting that they're cheaper. Sod it. With a 28% hike they may as well use a middle man.

I'm dreading having to trawl through comparison sites - so if any brokers want to give me a quick quote please PM me. Renewal due by Sat 22nd.

 

[wormcity]

We have this as well,
What really bugs me is when we get the renewal quote through, if we go back to the insurance companies website and get a 'new quote' we usually get an online saving of 10% off the price - which is generally lower than the renewal notice in the first place.

Why can't they just give the best price in the beginning !

Ron

 

[JHSameday]

They say in their advertising that they are not on comparison website so they can pass on the saving to their customers, what a load of bull...

 

Inertia selling - get 'em on board and they won't bother shopping. All insurers do the same.

The 'we don't uses brokers' line is flawed since they obviously far higher marketing costs.

Unfortunately, car insurance is viewed as a grudge purchase, and as sich is connsistently mis-sol;d and mis-bought, with far too much emphasis on headline price and little attention to what a policy actually provides, claims handling experience/reputation and efficiency.

 

[popunder]

"Both Gocompare and Comparethemarket have spent approximately £25m each over the last 12 months on their marketing efforts. The majority of which has been spent in TV advertising. The seven other aggregators all have marketing budgets of around £10m each. That means that the nine aggregators involved in this marketing battle are spending around £120m trying to capture UK online insurance customers." - Dataplusinsight.com

Add all the direct insurers and total probably £200m. All this inevitably goes onto our premiums.

 

[I Love Spreadsheets]

Based on 10+ years working on systems and procedures in the mortor insurance industry;

(1) Renewals are always more expensive than if you went to the company as a new client. They want to take advantage of you being a loyal customer or the fact that you will let it auto-renew. My tip here is, once you have your policy set up call your insurance company up and tell them you dont want the auto-renewal.

(2) It is in fact more expensive for Direct Line to market themselves because they are not on the comparison sites. Think about it, that is one whole channel of marketing they have excluded themselves from and they have to make up for.

(3) Expect a good few years of major price hikes in all kinds of insurance. Insurance companies are under written by money from the city, however there is far less money in the city so the insurance companies are getting charged more to be under written

 

[Astaroth]

1) Wouldnt cancel auto/ presumptive renewal as it is ultimately a reasonable safety net if for some reason you do forget to renew but absolutely shop around each year

2) The thing is that Direct Line do not not advertise on aggregators. Privilege is underwritten by DL and is on aggregators as are other brands owned by RBS Insurance (as DL is). The mix gives them a reasonable marketing message for one brand and still to get "benefit" from the aggregator channel.

Whilst I havent been working on PL Motor for a while, certainly the jury was out on if there was any profit to be made through aggregator. Another client made an average loss of £10 per policy sold through an aggregator and so was reliant on retaining business in year 2 to make any profit at all (and that not being made by the person going back in through the aggregators again)

Direct Line is also in the cash cow stage of its development. It has a massive back book of people with a low propensity to switch and thus low acquisition costs. General marketing principles would be to milk it for all its worth whilst in the hard part of the cycle.

3) I would agree that there is reduced capital available for new entrants and that with Solvency II around the corner some insurers are going to need to bolster their capital reserves there has been little noise of any of the big boys having a big push to drive up their reserves.

The current economic situation is pushing up premiums in other ways however with the much lower ROI for investments the insurers make (for many years the only profit that some insurers actually made), higher rates of fraud and the general claims inflation.



The theory with motor insurance was that for most people you could put through an annual price increase to your customer base but because of other factors (the car is a year older, they have another years driving experience etc) the customer would see a stagnant or small price decrease in real terms even if the insurer is getting a better £ per risk.

The problem with the model at the moment is that too many are writing new business at a loss (and at times, a massive loss) that the pricing differential between years may still work in theory the difference between new business and say year 3 is massive and the "pain" of shopping around now seems worth it for a growing proportion.

 

[Searcher]

I'm sure they all hope we auto-renew and can't be bothered to change insurer. Perhaps that's just how it is these days. Insureres expect no loyalty from consumers thanks to the internet etc and so they need to maximise 'what they've got' rather than show loyalty to a client.

Anyway, have managed to get them down a bit so far so the increase is 17% and not 28%. Three more days to go ...

 

[Deleted member 61074]

Auto renew ? I didn't know my policy was set not to auto renew thus drove for 4 months without insurance!

 

[Christine Hough]

For what it is worth I changed from Direct line to Swinton and save a packet. I will have to see at renewal whether Swinton hike up the prices for 'loyalty' but so far they have been very good for both car and home.

 

[PhilWarman]

Difference there is that Swinton are a broker and DL are an insurer, a broker will search around to ensure you're getting the best deal from their markets - the direct insurer only has 1 rating structure.

For every £1 of premium income, most motor insurers are paying out around £1.20 in claims so it's going to continue to increase.

 

[SamStones]

Direct Line did the exact same thing to me, 30% increase. I asked them what they were playing at and they said that most insurers costs had gone up since last year. I asked for a better price, they said no. I said goodbye! Simples! <pun intended>

 

[Esk247]

For some reason..my insurance has just gone down

I know it's not practical for some but if you're running a second hand car at 2.0 litre, it really is worth the swap for a 1.6, i saved £400 instantly when i dropped down the engine sizes. The insurance company actually paid me £100

As others have said, shop around, get some quotes from other companies. If they quote you £475 ask for it at £400 and then they'll meet you somewhere in the middle.

 

[popunder]

I would compare Direct Line prices against my insurance price comparison website catcompare.com.

We compare over 90 insurance companies, websites and brokers. Would be good to know how you get on.

cat x

Well OK I ran a quote through your (affiliate) site, came up with some decent competitive prices similar to what I actually paid recently after a good look round. Must have beaten Direct Line as I didn't go with them.

One suggestion I would make is make it much clearer how to modify the quote so that people can adjust their excess etc., the link is there but it's tiny!

Weirdly I increased my voluntary excess by £50 and the price went up 21p...?

Is your site making you any decent commissions or is it too soon to tell?

 

[Astaroth]

Looks like a basic white label of Quotezone's offering but the footer suggests the site is run by Quotezone where as the domain is not owned by them. Think the legalities need to be looked into better to be honest.

You can discuss revenues with them at https://affiliates-centre.quotezone.co.uk/ but the aggregator market is so competitive and promiscuous at the moment that no one is making any significant money unless you have millions to invest and accept razor thin margins

 

[catcompare]

For some reason..my insurance has just gone down

I know it's not practical for some but if you're running a second hand car at 2.0 litre, it really is worth the swap for a 1.6, i saved £400 instantly when i dropped down the engine sizes. The insurance company actually paid me £100

As others have said, shop around, get some quotes from other companies. If they quote you £475 ask for it at £400 and then they'll meet you somewhere in the middle.

Good point here, i also noticed that sometimes newer models can also be cheaper to insure, prob because newer cars are in general more safe & difficult to hotwire.

 

[catcompare]

Well OK I ran a quote through your (affiliate) site, came up with some decent competitive prices similar to what I actually paid recently after a good look round. Must have beaten Direct Line as I didn't go with them.

One suggestion I would make is make it much clearer how to modify the quote so that people can adjust their excess etc., the link is there but it's tiny!

Weirdly I increased my voluntary excess by £50 and the price went up 21p...?

Is your site making you any decent commissions or is it too soon to tell?

Absolutely love the feedback, very useful thank you and good to hear catcompare.com must have beaten Direct Line.

Insurance prices vary using 'look a like' (aka predictive) risk models based on historic quote information, perhaps offering voluntary excess has predicted a minuscule increase in risk.

Is the site making decent commissions? No. But i wont give up until delivery of my business model which fits catcompare.com in the UK insurance comparison mass marketplace. We are proving more and more popular for car, home, life insurance everyday.

cat x

 

[catcompare]

Inertia selling - get 'em on board and they won't bother shopping. All insurers do the same.

The 'we don't uses brokers' line is flawed since they obviously far higher marketing costs.

Unfortunately, car insurance is viewed as a grudge purchase, and as sich is connsistently mis-sol;d and mis-bought, with far too much emphasis on headline price and little attention to what a policy actually provides, claims handling experience/reputation and efficiency.

Agreed. I would guess some companies increase their renewal prices while ensuring it overall it always makes more money in increased revenue, than lost money in losing customers, like Searcher.

 

[bizloanservices]

I'm becoming wary of insurance comparison sites. We all know that not every insurance company is featured on a comparison site so that makes the concept flawed to start with.

However, the main concern I have is that the provision of the quote is template driven so there's little room to explore your personal circumstances which could change the quotation. It's too easy to inadvertently (or deliberately) click an option because it lowers your premium. You're then leaving a way in for the insurance company to deny your claim.

At least with a broker you have someone you guide you through the process, ensuring your not tripping yourself up and they are there to handle a claim on your behalf to deal with the inevitable push-back.