Why is the ethical Co-op ‘ripping off’ the elderly on insurance?

Money

A major insurance company has admitted it knows many of its elderly customers are paying too much for their home insurance.

The Co-operative — which prides itself on being an ethical business — said in a letter seen by Money Mail that ‘the majority’ of its customers who have an outdated and often more expensive policy are of ‘an older generation’.

It added that it was ‘of course’ aware of the date of birth of all its customers but, despite knowing that many people were overpaying, it would be ‘unethical’ for the company to make any assumptions based on age.

Because of this, the Co-op says it is unable to intervene to help them get a better deal, even though many find it hard to shop around.

Shocked: Renee Hensman, 95, pictured with friend Gordon Pitcher, has been kept on an expensive, outdated home insurance policy for more than a decade

Shocked: Renee Hensman, 95, pictured with friend Gordon Pitcher, has been kept on an expensive, outdated home insurance policy for more than a decade

Shocked: Renee Hensman, 95, pictured with friend Gordon Pitcher, has been kept on an expensive, outdated home insurance policy for more than a decade

The company’s staggering confession lays bare the scale of the ‘renewal rip-off’ facing elderly customers.

It was revealed in a letter to Renee Hensman, who is 95 years old, hard of hearing, blind in one eye and suffers from arthritis so crippling that she struggles to hold a pen or type.

Like many of her generation, she does not use the internet.

You might have thought any major financial firm would realise Renee was exactly the kind of customer who needs a little extra help.

But her insurer, the Co-operative, has knowingly kept the widow — who served on the railways during World War II — on an expensive, outdated home insurance policy for more than a decade.

It was only when long-standing family friend Gordon Pitcher, 53, a retired bank manager, discovered the policy that it emerged she had been overpaying by £250 a year.

Renee, who lives in Manchester, has been a Co-op customer for more than 15 years. This year, the firm put up the cost of covering her three-bedroom semi to £441 a year. 

In fact, the full price of the policy was £580, but because Renee’s late husband, Harold, used to work for the Co-operative, she receives a discount.

Yet Gordon discovered that for just £190 — less than half what she was paying — Renee could obtain a similar policy online with the Co-operative better suited to her needs.

When Gordon complained to the insurer, he was told Renee was on an old kind of policy that was no longer sold.

When he asked why the firm doesn’t stop renewing these older policies, the Co-op said: ‘We don’t have the right to make our customers change their policies.’

It went on: ‘The majority of these policies are, indeed, held by our older customer base for the simple reason that they stopped being sold over ten years ago. 

Therefore it stands to reason that the majority of customers who own these policies would be the older generation.

‘We are of course aware of the date of birth of our customers, as this detail is included on file.

‘We don’t, however, make any judgments or assumptions about our more elderly client base as this would be deemed unethical. We’ve no right to prejudice our customers based on their age or treat them any differently than the rest of our customers.’

The Co-operative also said it told Renee when it wrote to her with her annual renewal quote she may be able to get a better deal elsewhere

The Co-operative also said it told Renee when it wrote to her with her annual renewal quote she may be able to get a better deal elsewhere

The Co-operative also said it told Renee when it wrote to her with her annual renewal quote she may be able to get a better deal elsewhere

The Co-operative also said it told Renee when it wrote to her with her annual renewal quote she may be able to get a better deal elsewhere. But Renee, who never saw this line in letters sent by the firm, says she would find it very difficult to shop around due to her hearing and sight problems.

The Co-operative’s letter tries to counter this by saying: ‘You struggle to hear sometimes . . . however, our call centre staff are fully trained to deal with this and would have been happy to discuss your policy at any time.’

The firm also said that Gordon was not comparing like-for-like cover, adding: ‘While I agree that in many respects our newer style of policy is more comprehensive and can often work out cheaper, this isn’t always the case.’

Yet Gordon says: ‘Renee was widowed more than 20 years ago and has few living close relatives. She is also naive financially, as her husband looked after this side of things. I think this ripping off of elderly customers is outrageous.’

Renee says: ‘I was really shocked to find out that I was being charged so much more than was necessary. I am worried I’m not alone and that lots of other older people have these kinds of policies.’

Indeed, thousands of vulnerable and elderly people are being stung by insurers who know they struggle to shop around for a better deal.

It is feared firms are increasingly using customer details to identify those who, like Renee, are unlikely to move insurance provider — and so hit them with higher charges.

Some five million customers fail to shop around and switch home insurance policies each year, according to comparison website GoCompare. Instead, they allow their existing policy to roll over on to more expensive rates in a process called auto-renewal.

Baroness Ros Altmann criticised the way older people have been treated

Baroness Ros Altmann criticised the way older people have been treated

Baroness Ros Altmann criticised the way older people have been treated

Regulatory body the Financial Conduct Authority has called on financial firms to offer more support to older customers.

Experts say the wealth of data in insurers’ hands means that major firms should have no difficulty in identifying vulnerable customers.

In May, the Mail exposed how insurers are using computer programs to spy on shopping habits, social media posts and even phone usage.

Baroness Ros Altmann, who is a campaigner for older people, says: ‘It is so disturbing to see elderly people being treated in this way. Very often, these are the most loyal and long-standing customers, whose inability to search online is cruelly taken advantage of.’

The Association of British Insurers has issued new guidelines to prevent firms overcharging loyal customers. Insurers will commit to review the plans of those customers who have been with the firm for five years or more to see if they are on the best value policy.

The Financial Ombudsman will consider complaints about rip-off renewal quotes where insurers can’t give a clear reason for a price hike or have failed to do enough to inform customers of newer and cheaper policies. In some cases, insurers have been told to hand back more than £1,000.

A Co-operative spokesman says: ‘We would like to apologise for the correspondence Mrs Hensman has received on this matter, which has fallen short of our usual high standards. We will be contacting her to apologise and offer a gesture of goodwill payment.

‘For many customers, our older home insurance policy provides a better level of cover. However, we recognise that for some customers, our newer product may be better suited to their needs.

‘For this reason, we highlight to these customers at renewal that we have an alternative product.’

He adds that the Co-op ‘had attempted to call large numbers of customers’, but that this had not resulted in the majority of them switching.

r.lythe@dailymail.co.uk

 

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