A MAJOR car insurer is set to pay out £30million in compensation after customers were wrongly overcharged on their renewals.
Direct Line will pay out the money to car insurance and home insurance policy holders.
GettyDirect Line is issuing customers refunds after they were overcharged[/caption]
One of the UK’s biggest insurers admitted to wrongly implementing new rules brought in by the Financial Conduct Authority (FCA) in early 2022.
The new rules prevent home and motor insurance customers renewing their policies from being quoted prices which are higher than a new customer would be quoted.
However, the error from Direct Line meant existing customers were charged more for their renewal than they would have been if they were a new customer.
A spokesperson said: “An error in our implementation of these rules has meant that our calculation of the equivalent new business price for some customers failed to comply with the regulation.”
“As a result, those customers have paid a renewal price higher than they should have.”
The insurance giant has now started a review into its past policies.
It is not clear at this stage how many customers have been impacted, but Direct Line estimates around £30million in compensation will be issued.
The Sun has also asked the insurer to confirm what the average compensation payment will be and we will update this story once we have heard back.
Customers in line for payments will be contacted directly, so you don’t have to do anything at this stage.
The spokesperson added: “We have always sought to operate within the FCA’s pricing rules.
“What has become clear from our engagement with the regulator is that there are a group of customers who may have been incorrectly charged.
“The majority of customers who have seen an increase in their premiums will have been unaffected by this issue.”
Direct Line increased prices across its motor and home insurance policies over this year as the cost of claims soared.
The average motor renewal premium jumped by 19% year-on-year over the start of 2023.
The insurer wasn’t the only one increasing premiums either.
Research from Confused.com found the average price of car insurance policies was £222 more expensive in July this year compared to the same time in 2022.
The jump was the biggest yearly price increase on record, the price comparison site said.
It saw one mum’s premium go up from £291 to a staggering £1,351 a year.
Meanwhile, one driver saw his policy soar by £250 despite no claims or change in circumstances.
How do you complain about insurance claims?
Insurers are required to have a written complaints process that tells helps customers how to make a complaint.
You should be able to find the information on their website but if you don’t, ask them to send it to you.
It’s worth making your complaint as soon as possible, as it’ll be easier to remember all the relevant details to strengthen your case.
Then simply follow each stage of the process, and submit as much evidence as you can.
Once you’ve sent in your complaint, the firm needs to give you a response within eight weeks.
If you don’t get a response within eight weeks or you’re not happy with the one you do get, you can take your complaint to the free Financial Ombudsman Service.
Do you have a money problem that needs sorting? Get in touch by emailing [email protected].
You can also join our new Sun Money Facebook group to share stories and tips and engage with the consumer team and other group members.
Do you have a money problem that needs sorting? Get in touch by emailing [email protected].
You can also join our new Sun Money Facebook group to share stories and tips and engage with the consumer team and other group members.