A much more concerning pattern is starting to take hold. Surviving spouses are having their auto and homeowners insurance rates increase dramatically following the death of their spouse. Kay Lawley, a resident of the United Kingdom, recently experienced this distressing situation firsthand after receiving renewal quotes from Ageas for her insurance policies.
When Lawley’s husband died unexpectedly, Lawley was shocked. Needless to say, her car insurance quote increased by £47, from £301 to £348! On top of that her home and contents insurance went up by almost 12%, from £1,039 to £1,161. Prior to the death of her husband, her renewal quote was a little over £200. Once Ageas found out about his death, it shot up to £641. This was a breathtaking £441 rise thanks only to the fact that she was now a widowed policyholder.
As fellow bereaved partner Alison Roper found out, the cost of home and buildings insurance jumped dramatically. After the death of her husband, the quotes increased by as much as 15%. Just like both women’s experiences, this outcome has become the unfortunate norm with insurance companies. This pattern can complicate the economic burden of grieving families.
Ageas, the insurers in this case, has bombarded consumers with messages explaining how joint policyholders are statistically lower risk than single policy holders. Consequently, joint-policyholders receive considerable discounts on their insurance premiums. This discount disappears upon death of a same-sex partner, resulting in increased expenses for their surviving spouse or partner. James Daley, managing director of financial firm Fairer Finance, slammed the lack of humanity displayed by these pricing algorithms. He pointed out that “these cases serve to illuminate the inhumane quality that exists inside most insurers’ pricing algorithms.”
Lawley said she was deeply disappointed by Ageas’s failure to be open and honest about why the premium increases had been necessary. “When I asked why, Ageas was unable to give me any reason other than ‘that’s what comes up on the screen,’” she stated. She posed an essential question. What kind of wisdom can result from making decisions while a person is emotionally raw and often in a state of fiscal crisis? I was already the lead sponsor on both bills and otherwise nothing has changed. How can such critical decisions be made at a time when the last partner standing understandably would not have the ability to contest?
Lawley’s family has now accepted a quote of £229 from another insurance company after the ordeal Ageas put her through. Ageas admitted that its process had let Lawley down. Thomas Quirke, chief underwriting officer at Ageas, commented on the matter, stating, “We understand that removing this discount could cause additional distress to bereaved customers who have lost a partner or spouse since their last renewal.”
Steve Elliott had a very similar experience with his mother’s insurance policy with Swinton Insurance. Originally in both their names, Elliott pointed out that his father was the primary policyholder. But after his father passed away, the renewal quote increased from a little over £200 to £641. In response, I told them that absolutely nothing else had changed. My mother now risks a £441 fee for having outlived her husband,” he remembered. Swinton explained the price increase as due to their own internal system and announced they were powerless to change it.
Swinton’s spokesperson admitted they’d misjudged the public reaction from bereaved customers. They assured me that the agent should have escalated the issue or at least brought it to their underwriting team’s attention for further review. They continued, “We are taking this up with the team to learn from it and improve.”
Daley’s message was aimed squarely at insurers, exhorting them strongly to reconsider their practices of pricing. He stressed that “today’s pricing practices are eroding consumer confidence,” particularly as artificial intelligence makes the insurance pricing black box even more complicated. Most importantly, he stressed, these decisions need not be made on statistical grounds alone. They forget to account for the emotional, psychological and mental havoc wreaked by the loss of a partner.
Lawley and Roper’s experiences underscore the harsh reality that anyone grieving is forced to endure. They are grieving their loss, they are having to address skyrocketing insurance rates in this difficult time. Insurers should reexamine their policies and procedures to avoid unnecessary compassion erosion and provide meaningful support to customers who are grieving their loss.