Andrew Vine: Big insurers are too entrenched in rip-off culture. They need to be made to reform

It’s a mindset that sees loyal customers viewed as suckers, to be exploited with relentlessly increasing premiums every year they stay with a company, instead of treated fairly.

They’re blatant about it, doing nothing to disguise or justify it. If the price was increasing in line with inflation, that would be understandable, but it doesn’t. It is always many multiples of that, a naked attempt to screw money out of the customer.

I always view October with a degree of trepidation because it’s one of the most expensive months of the year when both my home and car insurance fall due for renewal.

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Thankfully, I haven’t needed to make a claim on either. But, sure enough, when the renewal letters arrived, there was a hike of 14 per cent for home and contents, and 18 per cent for the car. Why?

There was no coherent answer when I rang the respective call centres. In particular, the home insurance was with a company that makes great play out of its supposedly ethical business practices, which are obviously paying off because its last set of annual figures showed it had a very good year.

What’s ethical about a 14 per cent hike? Isn’t that more akin to sharp practice? Asking the questions produced what can charitably described as a confused response. In a nutshell, the answer from both companies was “That’s the price. Take it or leave it”.

I left it, and shopped around. Sure enough, I’ve saved money, and on the home insurance, found the same level of cover for approximately a third of the price.

Good though it always feels to pay less for something, I’m under no illusions. It’s an introductory offer, and when next year’s renewal comes, I’ve no doubt the increase being asked will amount to a lot more than 14 per cent, and I’ll duly move on to another company.

But what about those who find it difficult to shop around? Like an 85-year-old relative of mine who has been paying over the odds for her home insurance for years by renewing with the same company. She doesn’t use the internet, and can’t access the price-comparison websites I turn to.

It was only when her daughter realised what was happening and intervened that she moved to another insurer and started paying less.

This amounts to a company relentlessly squeezing money from an elderly woman, who like many of her generation has to get by on a small pension and what little interest is paid on her savings. It is both exploitative and wrong.

That’s why I raised a cheer when Citizens Advice blew the whistle on the insurance industry and lodged a so-called “super complaint” with the Competitions and Markets Authority (CMA) last month.

Companies offering savings, mortgages and contracts for broadband and mobile phones which behave in the same way were also included in the complaint. The overcharging of those who stick with companies year in and year out amounts to £4.1bn a year, equivalent to an average of £877 for each person affected.

The CMA has three months to consider the complaint, and the Financial Conduct Authority is also looking at whether insurers are overcharging customers. Good. I hope both bodies throw the book at them.

A reckoning on this grubby and greedy ethos is long overdue, and it’s an indictment of a lack of basic decency on the part of those in charge of these companies that routine overcharging has become so central to their business practices.

Customer loyalty means nothing to them other than as a body of people to be ripped off. Whatever happened to the concept of valuing regular customers and treating them fairly? It is a notion that lies at the heart of any small, independent business, keen for repeat trade, but is entirely absent from too many large companies.

Instead, the aim is to hook in new customers at an initially favourable price and then soak them.

They seem unable to appreciate that it is counter-productive in the long term. What do they have, other than their customers? I’m resentful at the blatant attempts to hike my premiums, and will avoid giving my business to the companies concerned in future.

Firms never used to behave like this. They prized their customers and were keen to keep them. Treating them fairly was central to that. If prices went up, there was a good reason for it.

There is an opportunity here for new companies to step into the insurance market with a genuinely ethical approach, one that guarantees fair pricing and an absence of routine yearly hikes. I’d give a company like that my business, and I’m sure a lot of others would too.