Ben Wright* recently had the shocking experience of AA cover on his family’s car automatically renewing for a staggering £747. To his surprise, if he had visited the AA website as a new customer, he would have paid just £170 for the exact same policy.
This situation is not unique; many companies entice customers with initial discounts only to hit them with significantly higher prices in subsequent years. AA, which is now privately owned by a public company, stands out for the remarkable price increases it imposes on loyal customers.
Wright, a loyal AA customer for more than two decades, had paid around £575 in the previous year, which saw the new price increase by a whopping 30%. When he expressed his complaints to the company, he received no refund, leaving him with the impression that AA had deliberately concealed a substantial price increase in the hope that it would not be noticed.
Wright’s policy, “family” coverage, provides breakdown assistance to him, his wife, and their daughter in any vehicle they drive, along with home launch, relay, and other travel services. He only became aware of the automatic renewal when he noticed a £747 charge on his bank statements because the renewal email ended up in his junk mail.
Wright is not the first AA customer to complain about the issue. In 2020, another Money reader reported a 50% increase in insurance premiums.
Wright expresses her frustration: “I wasn’t even aware I signed up for auto-renewal and was too busy working to realize it had expired. When I complained, they suggested it probably reflected a discount that I got the last one.” year – which is all in their imagination because I didn’t get any discount last year. As I was outside the 14-day cooling-off period, the inflated price remains. To say I feel cheated is a huge understatement. it will not be renewed next year.”
Wright’s displeasure deepened when Money informed him of the £170 price offered to new AA customers on the company’s website. This represents a first-year discount of 50% from the original £340. Even the “full” price is less than half of what Wright was charged.
This scenario is a clear example of what consumer advocacy group? he called the “loyalty price premium,” where customers who automatically renew each year end up paying significantly more than those who buy.
In 2022, the Financial Conduct Authority banned insurers from charging existing home and car policyholders higher premiums to fund discounts for new customers. However, these regulations did not apply to breakdown service providers.
The AA says Wright’s case was complex because he had perfected his coverage and made calls in the previous year. They also mention that he had additional coverage such as key loss insurance that was not offered to new customers. The AA states: “Our prices reflect the service offered. You can pay a lot less, but our members want great service. We have been a recommended provider of Which? for the past five years. The renewal note invites the member to contact If they would like to discuss their policy, it also clearly states that they can shop.”
Founded in 1905 as the Automobile Association, the AA faced financial problems when it went public in 2014, with debts totaling £3 billion. Private equity firms CVC, Permira, and Charterhouse profited heavily from the IPO, raising £1.2 billion. However, the AA was struggling with a £2.6bn debt. In 2020, it was taken back into private ownership by two new joint-stock companies.