31st Aug 2018
Home insurance customers who remain loyal to the same provider can pay an extra £7 per year, research by Which? has revealed.
The survey of 7,000 people found that those who had held a combined buildings and contents policy for over a year paid £270 annually on average. In contrast new customers were paying £195 for the same policy.
Seven out of ten people had been with their insurer for longer than a year, a statistic that is pertinent given that the loyalty penalty was found to grow over time.
For example, for a policy that was 20 or more years old, the average premium paid for combined insurance was £396 per year, compared with the £195 paid by new customers – a figure that is almost double the amount.
Which? also found that some customers had resorted to cancelling existing policies and then re-purchasing the same package to take advantage of a new customer discount, with many insurers allowing the practise.
Harry Rose, Which? Money Editor, commented: "It is unacceptable that longstanding policyholders are taken for granted by insurance providers and hit by these excessive premiums.
"Customers who prefer to stay with one provider are at risk of being exploited by these vastly overpriced premiums when little has changed in the service they receive.”
Malcom Tarling, a spokesman for The Association of British Insurers (ABI), said: “We recognise that the insurance market is not working as well as it should for many long-standing customers.
“We want everyone to get the best deal in a competitive market, which is why we have launched an industry initiative to help those customers who do not shop around.
“This will include insurers reviewing the policies of customers who have been on their books for five or more years to ensure they are getting the best deal for their needs.”