New research from Citizens Advice suggests that the average home insurance premium of loyal customers increases as each year with their provider passes.
Both the Competition and Markets Authority (CMA) and the Financial Conduct Authority (FCA) have been conducting investigations into insurance company practices, specifically the way in which retained customers are charged more for their annual insurance premiums than new customers. Citizens Advice has used this research to conclude that home insurance companies make 100% of their profits from loyal customers, with new customers paying £172 a year on average, and loyal customers paying almost double that, with £325 a year on average.
75% of Customers Benefit From Switching
According to Citizens Advice, around 12 million customers are affected by this “penalty” for loyalty. Huw Evans, director-general of the Association of British Insurers, said: “Three-quarters of insurance customers benefit from shopping around, but we accept there needs to be a better balance between the deals offered to new consumers and the interests of long-standing customers.”
If you would like help switching to a new insurance policy, please get in touch. Our experienced advisers would be glad to help.