What a perverse game insurers play with their clients.
Reader Peter Legind, from Saxmundham in Suffolk, contacted me last week to tell me about his experience with Hastings Direct, and it’s all pretty unedifying.
Peter, a 61-year-old semi-retired buy-to-let landlord, recently received a renewal notice for his buildings and contents insurance on the three-bedroom semi-detached house where he lives with his partner Julia.
Hastings’ renovation was for £404, a 27 per cent increase on the previous year. Since crime is not a problem in the local area, Peter thought that perhaps the sharp rise in prices was due to its increasing age (insurers don’t like people over 60) or (ironically) because Hastings had decided that The imminent construction of the nearby Sizewell C nuclear reactor would increase local complaints.
Reader Peter Legind had difficulty canceling his policy with Hastings Direct
Sensibly, Peter sought and found alternative cover with Quotemehappy, a subsidiary of Aviva. Although it cost £326, he bought it through a cashback website, giving him an additional £36 saving.
A result.
Since Hastings’ policy was set to renew automatically, he attempted to cancel it through the insurer’s website. “Figuring out how to do it was as difficult as finding a Labor politician who wouldn’t accept a gift,” he says.
Eventually, Julia contacted Hastings by phone (no small feat), only to be told that they shouldn’t have been so quick to jump into Aviva’s lap. Instead of £404, it could now offer a price of £304, a reduction from the previous year. Julia was perplexed and understandably thought £404 was the best price in Hastings. “No,” he replied, “prices change daily.” How would Julia and Peter know that?
Although Julia told Hastings to take the proverbial leap, her and Peter’s experience highlights flaws in the regulation of insurance renewals.
Surely it can’t be right for an insurer to offer a renewal premium and then, at the time the customer accepts that premium, not tell them that the coverage has actually dropped in price.
Customers must obtain the lower of the two prices: the price indicated in the renewal notice or the price at the time of renewal.
It can’t just be people calling threatening to leave (or, as in the case of Peter and Julia, customers who have already decided to take their business elsewhere) who are told they can get (or could have gotten) a premium cheaper renovation. .
The financial regulator now insists that insurers give existing policyholders the same premium that a new customer would get for identical coverage.
Direct Line is currently refunding £30 million to its customers as a result of breaching this rule.
The regulator should now extend the rule to protect those who are currently denied the benefit of falling prices between the time they receive a renewal bonus and the time they sign up for another year.
- Do you agree? Please email me at: jeff.prestridge@mailonsunday.co.uk
Bad advice paralyzes coverage for serious illnesses
CIExpert is the nation’s leading critical illness policy examiner.
Such plans pay a pre-agreed lump sum tax-free if the insured suffers a serious health condition such as a stroke, heart attack or Parkinson’s. Most also allow you to cover your children as part of the plan you purchase, as well as gain access to a variety of medical-related services.
However, CIExpert believes that these plans are sometimes being poorly advised and poorly purchased.
It suggests that people, following the advice of financial advisors fearful of running into compliance problems, too often buy bundled plans when two single policies would almost always be better for them. If a joint policy is purchased, coverage ends if a claim is made, resulting in a full payout, leaving the household without coverage. But if both adults in a household have single policies and one files a full payment claim, the other’s plan remains intact. If a child’s claim is made, both policies will pay instead of the single payment on a joint policy, and the plans will remain in force.
CIExpert says the average monthly cost of a 25-year joint policy providing £125,000 of cover for a 35-year-old couple with one child and another on the way equates to around £87 a month. This includes child coverage.
But if the same couple bought two individual policies, each providing £125,000 of cover, the combined monthly cost would be £93, just £6 more.
For this extra cost they would obtain two packages of coverage, plans adapted to their individual needs (for example, pregnancy coverage for the mother), two compensations if a claim is made for a child and policies that they could continue with in the event of a divorce later. the line.
If you have adult children who are thinking about purchasing critical illness coverage, perhaps in conjunction with the purchase of a home, urge them to consider purchasing individual policies rather than a joint plan. Breadth of coverage at an affordable price should always be the financial priority.
A fund manager that rewards loyalty? You won’t get that from a tracker
Stephen Yiu, director of the Blue Whale Growth Fund
Fund management groups have done little to attract clients in recent years, leaving investment platforms to do the marketing for them.
As a consequence of such a lackadaisical and arrogant approach, investors have steadily gravitated toward low-cost passive funds that simply follow stock markets.
So I take my hat off to Blue Whale Capital for taking a stand and waving a flag for good active fund management by deciding to reward their investors for their loyalty.
Subject to regulatory approval, from early next year it will refund one per cent of the annual management fee to investors in its Blue Whale Growth Fund.
The refund will only apply if the value of the fund reaches £1bn (it is currently around that level). It will then repay another one per cent for every £1 billion increase in the fund’s assets.
The savings will be returned to investors through a refund of the fund’s annual management fee, effectively increasing its value.
Most investors in this fund pay an annual management fee of 0.75 percent, so a one percent redemption will reduce this fee to 0.7425 percent.
Launched in late 2017 with £25 million of seed capital from Peter Hargreaves (co-founder of Hargreaves Lansdown), Blue Whale Growth is an investment success. Managed by Stephen Yiu, it has provided initial investors with returns of over 150 percent. For comparison, the average global fund over the same period has returned 80 percent.
Yiu manages a high-conviction portfolio, comprising just 27 stocks with heavy exposure to the United States and technology stocks in particular. The top ten holdings include Meta and Nvidia.
It’s a fund that could do well under President Donald Trump, whose victory last week was largely due to a promise to bring down inflation and interest rates.
“It’s up to fund managers to show investors that we’re offering something attractive,” Yiu told me. “It would be great if other investment houses followed our lead.” Let’s hope they do.
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