Nick Smith MP has called for proper scrutiny of the auto-renewal insurance cost after claims Blaenau Gwent drivers have overpaid by an estimated £1.4m.
The Financial Conduct Authority is set to report in the next few weeks on auto-renewal use in the motor industry.
In response, website MoneySuperMarket has reported Blaenau Gwent drivers are being cost £1,433,947 through the practice – with the UK bill estimated at £1.3bn.
In response, Mr Smith said it was important for drivers to check they can’t get a better deal by shopping around.
“There have been calls for insurers to ask customers clearly if they want to opt-in to auto-renewals when they first buy their policy”, he said.
“If the estimates are accurate, this is money that many can’t afford to waste.
“The regulator must consider taking decisive action to put drivers back in control of their insurance.
“People shouldn’t have payments taken automatically from their accounts unless they have given their explicit consent. Insurers need to do more to ensure it doesn’t happen.
“In the meantime, I would urge everyone to consider their options come renewal time to see if they can get a better deal.”
A YouGov poll in December revealed 62 per centof consumers say auto-renewals deter them from shopping around for a more affordable policy, and almost six million drivers (23 per cent) automatically renewed their car insurance with their existing provider when their policy was last up for renewal, without checking a single other quote.
Dan Plant, Editor-in-Chief at MoneySuperMarket, said: “As our report lays bare, auto-renewal is far from fair, it reduces proper competition and ultimately costs consumers big money.
“Simple changes such as writing renewal notices in plain English, asking consumers to explicitly opt-in to auto-renewal when they buy their policy, and providing a click-through cancellation button on renewal emails will help drivers to make sure they are not paying more than they need to.”