Direct Line accused of mistreating loyal customers

by Gill Montia

Story link: Direct Line accused of mistreating loyal customers

Direct Line has been taken to task by a national newspaper which suggests that the firm is taking unfair advantage of its loyal customers.

According to a report in The Guardian, the company is issuing renewal premiums significantly above the rates than can be purchased online.

One Direct Line customer claims to have been quoted a renewal price for his home insurance of £551, when as a new customer he was quoted £173 for a better level of cover via Direct Line’s website. Quotes for a similar policy were available from other insurers for around £200.

According to Direct Line, the lower online premium includes a new customer discount plus a further reduction for purchasing on the Internet. However, the difference of £378 is a little hard to swallow.

A spokeswoman for Direct Line says that the insurer “aims to provide the keenest price possible to our existing customers … the discounts we offer to our new customers are intended as one-off incentives and apply only for the first year of the policy. The premium charged at renewal in subsequent years does not result in the customer overpaying, but reflects a fair price for the policy, once the incentives are removed.”

She adds: “Renewal prices are based on a number of factors, including the number of years the customer has been with us, claims made etc, using the rates available at that time, and cannot be compared to a new business quotation benefiting from promotional discounts.”

Meanwhile, moneysupermarket.com, the price comparison site, is warning that many car insurers “are unfairly taking advantage of customer loyalty”.