By Sally McLean
Millions of motorists could save more than £200 on their car insurance if they employ one tactic. A Which? survey found that when buyers haggled over the price they could see significant discounts. The consumer champions surveyed more than 2,004 adults with car insurance . They found that haggling over the price they were being offered in the first instance was a success for three fifths of drivers (61 per cent) and resulted in a reduction in the original offered price. And on average, the amount motorists that pay annually for cover saved per year was £64 – although some received much more sizeable reductions. One in five (22 per cent) of these respondents said they saved more than £20 and up to £40 off their insurer’s first offer, while the same percentage said they got more than £40 and up to £60 off their quote. One in ten (11 per cent) said they got more than £60 and up to £80 off, and a similar percentage (9 per cent) said they got more than £80 and up to £100 off. But three per cent saved more than £100 and up to £120 and five per cent said they were able to save more than £200 after haggling. Which? said the data raises questions about whether firms are meeting regulatory requirements to offer fair value. They said that If significantly better prices are offered – but only after haggling – insurers may be in breach of the Financial Conduct Authority ’s (FCA) Consumer Duty, which came into force in July 2023. Which? is concerned such behaviour could breach the rules, particularly around fair value. The FCA is clear that firms must demonstrate the price a consumer pays for a product or service ‘is reasonable compared to the overall benefits they can expect to receive.’ For general insurance products, firms have been subject to other regulatory requirements to offer fair value since October 2021. The FCA has said that where upfront discounts are clear and firms can demonstrate that customers not receiving discounts are getting fair value, this could meet regulatory standards. However, it is unclear how transparent these discounts are to consumers and how firms justify them. Overall, half (49%) of drivers noticed their premium go up at their last renewal, while a quarter (27%) saw a reduction. The ease with which customers haggled was not universal, however. Customers facing challenges at renewal – for example experiencing a difficult life event, a health condition, struggling to manage their finances, or lacking confidence or capability – appear to have a different experience of haggling than those who were not. Vulnerable customers were more likely to discuss their premium with their insurer, and these discussions led to price reductions at similar rates. These customers were also more likely to have to change their policy to get the lower price and were less likely to say they found the process easy. The Consumer Duty sets out the expectation that consumers in vulnerable circumstances should experience outcomes as good as those for other customers.Fair value requirements cover all firms in financial services, but the opaque nature of pricing in insurance makes the process of haggling more suspect. Sam Richardson, Deputy Editor of Which? Money, said: “Some motorists may be forgiven for wondering how the first price offered by their insurer could ever represent fair value if such big reductions in the cost of cover can be achieved with a simple phone call. “The FCA should look into this to determine whether insurers are falling short of their requirements under the Consumer Duty to offer fair value. “While some people may feel daunted by haggling with their insurer, this research underlines how it is worth doing for many consumers and is likely to be one of the most effective ways to cut the cost of your renewal.” The regulator is currently conducting a review of motor insurance models, and Which? believes it should be investigating this and the fairness of other pricing practices. If your insurer has increased its renewal price, ask it to justify the increase. Then point out the lower prices you’ve found elsewhere, and ask your insurer if it can better those offers. If it’s not able to provide a better quote, state that you’re willing to go elsewhere. If you’ve been a loyal customer for many years, it’s worth mentioning this. If the insurer isn’t budging much on the premium, one option is to ask for an add-on (such as breakdown cover) to be thrown in. Just make sure it’s worth it.