Insurers quoted higher premiums in IT outage chaos

Last Friday, a flawed Windows update from cybersecurity firm CrowdStrike caused catastrophic IT outages on millions of devices – grounding thousands of planes, as well as affecting banks, healthcare services and payment systems around the world. 

The insurance industry wasn't spared, either. Insurance pricing expert Consumer Intelligence is now warning that the chaos may have led to a spike in quotes –  affecting many customers who were shopping for home and car cover while systems were affected.    

How were insurance prices affected?

The research company Consumer Intelligence – which obtains millions of prices weekly to monitor pricing trends – found that on the day of the IT outage (Friday 19 July) multiple home and car insurance insurance brands raised their premiums, some by significant amounts.

Its data shows that 17 home insurance brands put up their prices – four of which increased their average annual premiums by between 32% and 65%. With one insurer, the average annual premium rose by a whopping £439.

Consumer Intelligence also detected price increases among 25 car insurers – although to a lesser extent.

With both types of insurance, the disruption also led to firms offering quotes to fewer customers.

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Why premium prices surged

Consumer Intelligence pinpoints some of the heftier price changes as the likely result of key underwriters temporarily disappearing from the market. 

Underwriters are companies that measure customer risk and set prices for insurers and brokers. With some underwriters absent, this may have left some insurance brands unable to offer their full range of quotes. This means that some customers would have had received higher quotes from the affected brands than they'd typically have been offered.

Another consequence of the IT outage has been that some automated processes – such as looking up car registration plates – also failed, which is thought to have impacted quotes. 

Ian Hughes, chief executive of Consumer Intelligence, said: 'We have been monitoring the situation to help build an understanding of the impact for the general insurance industry. Notable disruptions seen on Friday include registration look-up failures, underwriting changes causing huge price increases, and significant drops in quotability for a number of brands.'       

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What to do if you think you've been affected

Consumer Intelligence believes that home insurance pricing 'appeared to stabilise' by Saturday, with the numbers of insurers offering quotes having bounced back by Sunday.

So you're most likely to have been affected if you bought cover based on quotes generated on the Friday of the outage.

If you purchased home or car insurance on Friday or in the days since, you should check your premium by running a new quote to find out what you would have been offered if you were shopping for cover now. 

If there's a large discrepancy, you should contact your insurer to point this out and negotiate a better offer.

• Find out more: get new car and home insurance quotes with the service provided by Confused.com

Insurance firms should 'do the right thing'

Which? is also calling on insurance firms to do the right thing and contact affected customers to offer a fresh quote – and for industry regulator the Financial Conduct Authority to keep a close eye on the situation.

Sam Richardson, deputy editor of Which? Money, said: 'Last week's global IT outage continues to have far-reaching consequences for consumers, but one thing many wouldn't have bargained for is a huge spike in insurance premiums through no fault of their own.

'With the cost of insurance already eye-wateringly high, and trust in the sector low, firms should do the right thing and contact affected customers to offer a fresh quote. 

'The regulator should also keep a close eye on the situation to ensure that insurers can still demonstrate that their products represent fair value under the Consumer Duty – with tough action against brands failing to do so. 

'If you have bought insurance since Friday's IT outage, check your premiums by running a new customer quote to see if there's a large difference in price. If there is, you should contact your insurer to negotiate a lower offer.'

• Find out more: Which? calls for a crackdown on poor insurance service and value 

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