You are here: Home - Insurance - News -

Insurance premiums rise in spite of loyalty penalty ban

0
Written by:
31/08/2022
Research by Which? suggests existing car and home insurance customers are not benefiting from the ban on loyalty penalties.

Significant numbers of consumers are still paying more to renew their home and car insurance policies, despite the introduction of a ban on so-called loyalty penalties.

These are the findings from a survey carried out by Which?, the consumer group, based on the views of 14,000 of their members. More than half of those with home insurance and 43% with car insurance are paying a higher premium this year than they did last year. The average increase was £35 for car insurance customers and £41 for home insurance customers.

Out of those customers paying more, half had renewed with their current car or home insurer, while three in 10 had switched to a different provider.

Back in January, the Financial Conduct Authority (FCA), the financial regulator, introduced new rules which banned car and home insurers from offering different prices to new and renewing customers. Previously, new customers were offered discounted premiums, subsidised by the higher prices paid by longstanding policyholders.

In spite of the ban, it would appear that a substantial number of customers are seeing prices go up. This could be down to rising costs for insurers as a result of inflation. When it comes to car insurance, more people are driving since the pandemic and there are higher costs to obtain parts and materials for repairs.

Don’t forget to shop around

It isn’t all bad news though. Which? found that those who haggled with their current provider or switched to a different insurer were able to make significant savings. Shopping around near renewal time can pay off. Car insurance customers who switched insurer paid an average of £43 less in comparison to those who renewed with their existing provider. Home insurance switchers typically paid £103 less.

Overall, there was a 4.6% drop in the price consumers paid for car insurance before the end of 2021 versus between January and June of this year, with an average annual price of £343. Home insurance customers only paid 0.7% less at £329 during the first half of the year.

Unfortunately, the loyalty penalty ban hasn’t been completely effective due to a number of existing loopholes. The consumer group heard from a number of respondents who found cheaper quotes with their current insurer than their renewal offer while they were shopping around.

These discrepancies may be happening because the new loyalty penalty rules still allow insurers to offer customers different prices depending on whether they go directly to the insurer or use a comparison site, for example.

Jenny Ross, Which? money editor, said: “Our research shows it’s still the case that the price quoted by your insurer is not necessarily the best price you can get. Doing your research on comparison sites, haggling and switching remain effective ways of bringing down the cost of home and car insurance.”

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.

Seven ways to get help with energy bills this winter

We knew today’s announcement was going to be painful, but it’s still a shock to the system. When this kick...

Flight cancelled or delayed? Your rights explained

With no sign of the problems in UK aviation easing over the peak summer period, many will worry whether holida...

Rail strikes: Your travel and refund rights

Thousands of railway workers will strike across three days this week, grinding much of the transport system to...

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.

DIY investors: 10 common mistakes to avoid

For those without the help and experience of an adviser, here are 10 common DIY investor mistakes to avoid.

Mortgage down-valuations: Tips to avoid pulling out of a house sale

Down-valuations are on the rise. So, what does it mean for home buyers, and what can you do?

Five tips for surviving a bear market mauling

The S&P 500 has slipped into bear market territory and for UK investors, the FTSE 250 is also on the edge. Her...

Money Tips of the Week