Rise of the £1,000 car insurance bill… costs spiral even for drivers with ordinary cars and pristine records

Retired entrepreneur Harold King is determined to live long enough to join an exclusive club — and receive a congratulatory telegram from the King on his 100th birthday.

Yet the 90-year-old, from Southport in Merseyside, is already a member of a far less salubrious group. 

He is one of an increasing number of elderly retired people who have been asked to renew their insurance at a price of more than £1,000. Prices for car or home cover that, in many cases, customers cannot afford.

Campaigners and financial experts believe that older drivers are being targeted by insurers as an easy way to boost their profits against a backdrop of rising claim costs. 

They are often less tech savvy, more trusting and, therefore, less likely to shop around for a better deal.

Retired entrepreneur Harold King is one of an increasing number of elderly people who has been asked to renew his insurance at a price of more than £1,000

Dennis Reed is director of Silver Voices, a group that campaigns for financial fairness on behalf of the elderly.

He says many retired people are facing ‘eye-watering rises’ in insurance premiums, especially when they hit a landmark age such as 80. Often, the result is an annual renewal premium in excess of £1,000.

‘Such hikes and four-figure premiums cannot be justified in terms of the increased risk these policyholders pose,’ says Mr Reed. ‘In the case of car insurance, some elderly people are now being driven off the road because they cannot afford the new premiums. The insurance executives who sanction such astronomical premiums should be ashamed of themselves.’

James Daley, founder of consumer champion website Fairer Finance, says it is essential that insurers play fair with the elderly. He says: ‘I understand why insurers are putting prices up, but they must ensure they are pricing fairly and not penalising vulnerable customers.

‘When it comes to the elderly, insurers need to go the extra mile and make sure customers are able to shop around — so they can say that those who do commit to sky-high prices are doing so willingly.’

Mr Daley believes there is an argument for limitations to be placed on how insurers price policies so that vulnerable customer groups are protected from ever higher premiums. He adds: ‘There’s a case for the introduction of social tariffs — to support those being hit with unaffordable premiums.’

The latest data from Admiral, a company that insures 5 million motorists, indicates that average annual premiums across all age groups are now north of £1,000 with the youngest (17- and 18-year-olds) paying the most at £1,975.

Although its data indicates that the over-60s pay the lowest premiums (an average of £865), Admiral does not segment the data for this vast age group into premiums for the over-70s, 80s and 90s.

Evidence gathered by Money Mail indicates that it is the over-70s who routinely see their premiums at renewal more than double, in many cases pushing them above the £1,000 mark.

While some customers have avoided paying such high premiums by shopping around, they feel victimised. In nearly all the car insurance cases that Money Mail has scrutinised, the motorists have impeccable driving records with no-claim records going back years. They also do not use their cars often, resulting in annual mileage below 3,000 miles.

For Harold King, he has bitten the bullet and reluctantly paid nearly £1,400 to renew cover for his pride and joy — an 11-year-old Jaguar XJ. ‘I’ve always loved my motor cars,’ says Harold. ‘But I now only drive locally and I rarely do more than 2,000 miles a year.’

Although his decision to renew his cover with AXA meant only paying 5 pc more than last year, he says there will soon come a time when running his car no longer makes financial sense. While Harold shopped around before staying with AXA, it was a no-go: he was being quoted premiums in excess of £3,000.

John Jenkins’ partner, Donna, drives a 2012 Land Rover Freelander. Earlier this year, she was told her car cover would more than double to just below £1,500. This was despite no accidents or traffic offences and a no-claims discount going back 12 years.

When John, on Donna’s behalf, challenged Sainsbury’s Bank on the renewal price, it could not provide an explanation. ‘I thought insurance pricing was based on an assessment of risk,’ says 74-year-old John, a semi-retired chartered surveyor from Holmfirth in West Yorkshire.

‘Donna drives no more than 7,000 miles a year and she has an impeccable driving record.

‘The only thing that might explain the increase is that Donna had turned 60 just before the renewal premium was offered.’ Unlike Mr King, Donna was able to get more competitive cover by shopping around and taking out a policy with Sheila’s Wheels.

‘I feel the elderly are being taken advantage of,’ says John. ‘We took it upon ourselves to search for cheaper cover, but not all elderly people are comfortable using online comparison websites. They also mistakenly trust their insurer to give them a fair deal.’

New rules by the City regulator (the Financial Conduct Authority) were meant to ensure existing customers are not milked by insurers for extra premiums. But not all companies have played fair

New rules by the City regulator (the Financial Conduct Authority) were meant to ensure existing customers are not milked by insurers for extra premiums. But not all companies have played fair.

Last month, Direct Line was ordered by the regulator to compensate customers who had paid more for cover than someone coming to the company as a new customer.

John Whitlock, from Sherborne in Dorset, believes older drivers are being exploited by insurers.

Seventy-seven-year-old John used to run a candle making company before retiring. In August, when he sought new insurance after buying a second-hand Kia Sportage, he almost fainted when Saga sent him a quote for £3,631, a price fixed for three years.

‘I am a pensioner and get by on pension credit,’ says John. ‘I live in sheltered accommodation and we’re all struggling to pay our bills. Who do Saga think I am? A millionaire? My car is worth no more than £800, I live in a cul-de-sac, and Sherborne is not noted for crime.’

John was so incensed he emailed Saga boss Euan Sutherland to complain. The next day, he received a response saying the quote stood.

Although John has since found cover costing less than a fifth of what Saga wanted, he believes insurers are forcing people like him to consider whether they should continue driving.

‘The elderly are being penalised,’ he says, ‘and it’s got to stop. I will soon get to the point when I can no longer afford to drive.’

The Association of British Insurers told Money Mail: ‘Insurers appreciate the independence and freedom to travel that driving represents for customers — and they continue to do all they can to keep cover competitively priced.

‘Like many other sectors, they are feeling the pressure of soaring labour and material costs. Insurance is priced based on risk and the average cost of claims is higher for both younger and older drivers, which can impact premiums for these age groups.’

It’s an explanation which does not wash with older motorists.

Peter Moore, who lives near Nottingham, has a clean driving licence and a 20-year no-claims discount. But it didn’t stop Saga trying to push his premium up from £266 to £1,070, fixed for three years.

‘I own a 2018 Volvo two-litre,’ the 79-year-old told Money Mail yesterday. ‘I drive no more than 4,500 miles a year, the car is kept in immaculate condition — and I live in a low crime postcode. I’m a low-risk customer and a loyal one as well with Saga home insurance. But I feel the company is now profiteering at my expense.’

Saga says Peter has enjoyed three years of low-price cover, fixed at £266. Peter has done what everybody should do: move his business elsewhere — in his case, to AA where he is now paying £470.

‘Shop around,’ says Peter. ‘It’s the only way to fight back.’

Absolutely. Don’t fall for the £1,000-plus renewal premium.

This post first appeared on Dailymail.co.uk