Bereavement penalty causes insurance premium rises, exposing flaws in AI-based pricing models
Following the death of their partners, bereaved customers have experienced significant increases in renewal quotes for home and car insurance. For example, Kay Lawley saw her car insurance quote rise from £301 to £348 and her home and contents insurance quote jump from £1,039 to £1,161, an increase of around 12%.
These renewal price increases are attributed to algorithm-based pricing systems that match customers to the claims history of similar profiles. When one partner dies, this can produce what is being called a "bereavement penalty."
Insurance company Ageas stated that it should not remove the joint-policy discount to avoid causing distress. However, in Lawley’s case, the discount was effectively removed. Ageas refunded the extra premiums paid, sent flowers as a gesture, and acknowledged a process failure in this instance. They also noted that the discount will be lost at the next renewal.
Swinton Insurance faced a similar issue when a widow’s renewal quote increased from just over £200 to £641. After the family found a cheaper alternative at £229, Swinton apologized and offered compensation, stating that the matter would be escalated.
Alison Roper reported rises in both her home/buildings and car insurance premiums after her husband’s death, despite him not being the driver on the car policy, highlighting how bereavement can affect multiple insurance policies.
Industry bodies and consumer groups explain that insurers set prices based on risk assessments and personal circumstances. Yet, the Association of British Insurers declined to explain the bereavement premium or comment on its prevalence.
Consumer group Fairer Finance criticized the opaque pricing models and the use of AI-driven premiums, calling for greater transparency and stronger regulatory oversight to protect consumers during bereavement.
Campaigners describe this phenomenon as a bereavement penalty that undermines trust in insurers, urging governments and regulators to demand clearer explanations of pricing and to implement stronger safeguards for bereaved customers.
This report was published on 15 November 2025.
