By Victoria Bischoff and James Burton For The Daily Mail
Britain’s biggest insurer last night vowed to end a rip-off hitting millions of families.
In a victory for the Daily Mail, the boss of Aviva said it was wrong to charge loyal customers more every year.
Mark Wilson admitted the market was dysfunctional and promised to overhaul the way his firm sells insurance to ensure that all his 16million customers would have the best prices.
He called on the rest of the industry to follow suit.
The boss of LV=, which is the biggest car insurer, rallied to his call last night, admitting more needed to be done to help customers who stay with the same provider.
A Money Mail investigation revealed on Monday that loyal customers routinely pay three times the lowest market price for car and home cover.
In the worst cases they are charged £1,000 more than new customers, whose cut-price deals they effectively subsidise.
Speaking at Aviva’s annual meeting yesterday, chief executive Mr Wilson said: ‘There’s the broader problem of steep price rises when artificially low introductory discounts come to an end.
‘This means across the whole industry in the UK, when customers come to renew, they often get quoted more.
‘The market is broken. I don’t like it and neither do our customers. This dysfunctional market is a problem for the whole industry. And it requires an industry-wide solution. But we aren’t waiting for that.’
Mr Wilson promised to introduce a new product to ensure customers always got the best deal.
However, the firm would not reveal any more details. Richard Rowney, chief executive of LV=, told the Mail: ‘We agree that more needs to be done to support loyal consumers and we strongly believe that we need to tackle this together as an industry.
‘We will work to ensure that we continue to do what’s in the best interests of consumers, focusing on providing them with value for money and a great service.’
A spokesman for Direct Line said: ‘We will look at this new launch with interest.’
Mr Wilson told the Mail last night: ‘We’ve been working for the last 12 months on a product which rewards loyalty and offers our best prices to our existing customers and we plan to launch this later this year.
‘It’s time to tackle the broken system of steep price rises for insurance after artificially low introductory discounts end and we congratulate the Daily Mail on its campaign.’
Former pensions minister Baroness Altmann said: ‘Well done to the Daily Mail.
‘I’m delighted to see that Aviva is acknowledging these problems and it’s a really good step forward. It’s very often the most vulnerable people – the elderly and disabled – and those who work too many hours of the day who lose out because they don’t switch.’
Usually customers are offered better prices only if they threaten to leave.
At some insurers, as many as 80 per cent of customers roll over their insurance with their existing deal. The longer customers stay with their insurer, the more they are likely to be overpaying.
The renewal rip-off is thought to cost drivers £1billion a year.
James Daley, of consumer group Fairer Finance, said: ‘It’s great that Aviva are taking a stand and I hope that other insurers will follow suit … I’m sceptical that others will stop playing the game without heavy-handed intervention from regulators.’
A spokesman for the Association of British Insurers said: ‘The UK insurance market is highly competitive with most customers shopping around and lots of switching.’
Edited for ILSTV