You are here: Home - Insurance - News -

Home insurance firms make £1bn a year from loyal customers

0
Written by: Danielle Levy
10/04/2019
Home insurance companies make more than £1bn in profits each year from loyal customers who hold their policies for six years or more, Citizens Advice has found.

Research by the charity shows that loyal customers pay an average annual premium of £325 for their sixth year of insurance – almost double that of new customers (£172).

The charity also found that home insurance companies make 51% of their profits from customers who are defined by the market’s regulator as ‘potentially vulnerable’. This may be due to issues such as poor health.

These customers are likely to be paying the most for their home insurance. Citizens Advice estimates that 3.75 million policies have been held for 11 years or more and 71% of these customers are potentially vulnerable.

The table below outlines the findings from Citizens Advice:

Source: Citizens Advice

According to the most recent data that is available for 2016, Citizens Advice found there were 9.3 million policies belonging to customers who had been loyal for six years plus. However, there were only 6.9 million policies where customers switched after a year.

Regulator must act soon

The charity is calling for the financial regulator, the Financial Conduct Authority (FCA), to identify solutions and call an end to the ‘loyalty penalty’ as part of its insurance market study.

Gillian Guy, chief executive of Citizens Advice, described the findings asappalling”.

“What makes this worse is that vulnerable people are likely to be the most loyal to their provider,” she said.

“Since we submitted our super-complaint about the loyalty penalty, some companies have rightly promised to treat their customers better. Yet many more are still choosing to make their profits off their most loyal and vulnerable consumers,” Guy added.

She pointed out that the Competition and Markets Authority (CMA) responded to the super-complaint by asking regulators to come up with a plan to tackle the loyalty penalty by June.

“The clock is ticking, the FCA must act quickly to stop this systematic scam,” she said.

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Coronavirus and your finances: what help can you get?

News and updates on everything to do with coronavirus and your personal finances.

Everything you need to know about being furloughed

If you’ve been ‘furloughed’ by your company, here’s what it means…

The savings accounts paying the most interest

If one of your jobs this month is to get your finances in order, moving your savings to a higher paying deal i...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week

  • Cost of taking a mortgage holiday revealed: The average cost of a 3 month #mortgagepaymentholiday is £665.08, and… https://t.co/gWHI7Lo8zl
  • RT @BlackstockPR: "The government needs to grasp that mounting rent arrears are a serious economic issue that will impact many buy-to-let l…
  • "The government needs to grasp that mounting rent arrears are a serious economic issue that will impact many buy-to… https://t.co/KXusvi1RvR

Read previous post:
End of paper rail tickets will make it easier to claim compensation

Smart ticketing will be rolled out across Britain’s rail network this month, which should make it easier for passengers to...

Close