Julian Knight: What price an insurer's reputation in this sorry tale of airport angst?

We saw a prime example last week of a company putting a small saving ahead of its own reputation and refusing to play fair by its customers. The insurer Direct Line – along with Royal Bank of Scotland, Churchill and Tesco – announced that new policyholders who had taken out its travel insurance would not be covered while using Terminal 5 at Heathrow airport.

Talk about kicking people when they're down. After the shambles of the terminal's opening, which was nothing short of a national disgrace, consumers were feeling understandably anxious about travelling through the airport. Just when things seemed to have died down, big-name insurers rekindled their anxiety – a very mean-spirited act.

Direct Line deserved the criticism levelled at it, which may have brought about the volte-face it did 48 hours later, when it said that it would, after all, cover passengers going through Terminal 5 as a "goodwill" gesture. Thanks a bunch.

The insurer said that it had received undertakings from British Airways and the British Airports Authority that things had improved. It could have seen that by simply following the news, or lack of it, out of Terminal 5.

Anyone who had recently taken out travel insurance with Direct Line would be quite justified in asking what the company thought it was doing in putting them through such uncertainty.

Debacles like this let down an industry that made a useful PR move after last summer's horrendous floods in being seen, at least initially, to act fast.

It adds to the general impression that the insurance industry all too often tries to find any excuse it can to turn down legitimate claims from customers.

Car trouble

Here's another blot on the copybook of the insurance industry: the extra charge imposed by many leading players in the motoring sector of the industry on those customers who want to pay by monthly direct debit, rather than annually upfront. And they don't just charge a couple of quid: some of the extra fees involved would do a store- card provider or doorstep lending firm proud.

After two years of making do with hire cars, I have decided to rejoin the most overtaxed group of people in Britain – motorists. Shopping around online for car insurance last week, I found that if I clicked the option to pay by direct debit my premiums shot up by 10, 20 or, in one case, close to 30 per cent.

With most other products and services you either pay the same or get a discount for making the not inconsiderable commitment of signing up to a direct debit. So why not car insurance? Maybe insurers fear that people who pay in this way are more likely to switch between providers, damaging their bottom line.

Whatever the reason, consumers should have the right to be able to budget using direct debit without being charged extortionate fees. There are some insurers out there who don't make this group of customers pay extra, so why can't the rest follow suit? The present situation is a clear case of a sizeable chunk of the car insurance industry failing, in the words of the Financial Services Authority mantra, to treat customers fairly.