Direct Line will pay about £30m to customers who were charged more than they should have been to renew car and home insurance policies. The UK’s second biggest car insurer said it discovered the overcharging problem after the incorrect implementation of the new pricing practice regulation that came into force in January last year. Under the rules, existing customers should not be charged more than if they were a new customer. “An error in our implementation of these rules has meant that our calculation of the equivalent new business price for some customers failed to comply with the regulation,” the company said. “As a result, those customers have paid a renewal price higher than they should have. Redress will be paid to any affected policyholder. The current estimate of these payments is in the region of £30m.” Direct Line, which has a market value of more than £2bn, said it would reimburse all affected policyholders and that half of the costs related to the error had already been provided for in the company’s 2022 financial results. The Financial Conduct Authority said the move by Direct Line marked the first time a firm had voluntarily agreed to redress existing customers who had paid more than new customers to renew their policies since the rules came into force last year. “Direct Line Group has agreed a voluntary requirement having charged some existing home and motor customers more for their renewal than they would have done if they were a new customer,” the FCA said. “Direct Line Group will carry out a review to identify all instances where a customer has been overcharged and provide appropriate redress.” In a separate move, Direct Line agreed in June to go back through five years of motor insurance claims after admitting it underpaid some customers who had their cars and vans written off. The FCA ordered the company to review the claims after an investigation into the market. Direct Line, which has been accused by customers of upping premiums by 50% to 75%, has been reviewing all the total-loss claims that were settled between 1 September 2017 and 17 August 2022. Offering a price lower than fair market value is not allowed under FCA rules and the watchdog has said it will take action against companies that is found to be doing this. Sam Richardson, the deputy editor of Which? Money, said: “At a time when car and to a lesser extent home insurance premiums are rocketing, with insurers blaming rising claims costs, it’s shocking that customers are being hit by extra, unnecessary costs, just for being loyal to their insurer. This practice has been banned since the start of 2022.