Insurance renewal has become a tiresome game

Last year, we published a column arguing that most people are over-insured and waste substantial sums protecting themselves against things that are unlikely to happen, and where the cost of redress would in any case be bearable.

It's a surprisingly compelling argument, but our natural tendency to loss aversion prevents most of us from acting upon it. And in any case, there are some kinds of insurance that we can't do without.

Motor insurance is one of them. It's an odd business, though. Given that it's compulsory, you'd think it would be very profitable. It's not. Margins are wafer thin and in most years the industry overall doesn't make an underwriting profit.

Competition is intense. Fortunes are spent attracting new customers. Turn on the television any evening and you'll be subjected to a peculiar sub-genre of advertising that is effective precisely because it is so moronic: inane nodding bulldogs, meerkats with eastern European accents, robots you want to smash with a hammer and extravagantly mustachioed opera singers.

Does this result in a good deal for the consumer? Probably - provided that he or she is a low claims risk, and prepared to play the game. If you're high-risk you get stung. The average annual premium for a young driver is nudging £2,000, according to an index produced by the company with the robot.

If you're prone to inertia you'll pay, too. My own insurer has rewarded me for not claiming over the past year by adding £100 to my renewal quote. The price increase helps to fund all the advertising.

Being a reasonably savvy financial consumer, I used the opera singer's website to find some better deals. I'm well aware of the limitations of price comparison sites - they're currently being scrutinised by the Financial Conduct Authority - but nevertheless, they're a convenient starting point.

The first thing I notice is that my existing insurer is close to the top of the list with a quote that's around what I paid last year. That suggests they'd prefer to pay GoCompare for the "privilege" of recruiting a customer they've already got rather than just offer me a sensible price to start with.

The usual "Creme Eggs at the till" are still there: as you get closer to the end of the purchase journey, you're offered motor legal protection, breakdown cover and various other overpriced add-ons that supplement insurers' meagre profits.

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Insurers also seem to have taken surreptitious extra charges to a whole new level since I last renewed, sneaking in a "voluntary excess" of up to £300 and jacking up "administration fees" for policy changes or cancellations. At least two websites I looked at even levied an administration fee for cancellations during the 14-day "cooling off" period.

Business as usual, then. But here's something I wasn't expecting. One of the more attractive quotes generated by the comparison site was from John Lewis. Now, it so happens that I am a regular customer of the saintly partnership - it sends me flyers every month about home, car and travel insurance - so I thought I'd check whether I could get as good a deal by going direct.

The John Lewis Insurance website returned a quote that was almost exactly double the one generated on the price comparison site, for exactly the same level of cover, and that was after a 15 per cent discount for buying online. My jaw dropped.

< > I asked both parties why this was so. GoCompare says it simply takes quotes from insurers and does not apply any discounts of its own. John Lewis said the quotes it supplies to price comparison websites are the same as the ones it supplies customers who go direct. It added that minor differences in the information supplied by me account for the difference in price.

I was not very convinced by this explanation, but some subsequent fiddling around suggested the company is right. Factors such as whether my 10-year old car is worth £1,500 or £2,000 did alter the quotes slightly. So too did the form of words used to describe an incident three years ago, when one of my children opened the door on to a lamppost while I was reversing. "Accident - single vehicle", "Accident, driver at fault, no injuries" and "Driver hit immobile object" could all describe what actually happened, but they don't all generate the same price.

The biggest factor of all turned out to be the industry I work in (even though I don't actually use my car for work). Apparently national newspaper journalists are still considered a high insurance risk in some quarters, what with all that social drinking and excessive stress.

That's despite the fact that journalists these days spend more time on social media than social drinking - and right now, it's not the job that's raising my stress levels.

Jonathan Eley is editor of FTMoney. [email protected]. Twitter: @jonathaneley

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