British drivers wasting £565m in ‘loyalty’ tax
In April 2017, the FCA introduced changes designed to increasing transparency in the insurance sector by forcing insurers to show the previous year’s premium at each renewal so it can be directly compared to the new price. However, drivers don’t appear to be taking note.
Two thirds of drivers will see an increase of £40 or more for their fully comprehensive policy, but over a third (35%) still allow their policy to auto-renew. This is even though the majority (64%) had originally chosen their insurer based on price.
Some are still swayed by brand, either one they trust or like the look of. Younger generations were most swayed by marketing campaigns and offers. Those aged 55 and over were the most likely to choose insurers based on liking the brand (21%) and trust (26%).
Emma Garland, data scientist at MoneySuperMarket, said: “Despite significant cost savings to be made by switching insurer, over a third of drivers still allow their policy to automatically renew. Not only is this costing people millions of pounds a year at a time when insurance premiums are on the rise again, it also highlights that the FCA’s legislation hasn’t had a huge impact on consumer behaviour.
“No matter when your insurance is up for renewal, it pays to shop around and find a better deal. By taking out a policy with a different insurer you could save up to £259 on your premium, which for many people is probably the next four tanks of petrol.”