Can insurers charge existing customers more than new ones?<\/h3><\/div>![\"Danny](\"https:\/\/www.finder.com\/finder-us\/wp-uploads\/sites\/3\/2020\/07\/Danny-Butler.jpg\")
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Finder insurance expert Danny Butler<\/a> answers <\/em><\/div><\/div>If you\u2019d asked us this a few years ago, the answer would have been a disappointing yes. Until 2021, it was a sad reality in the insurance industry that not only did loyalty not pay, but it could actually have cost you even more dearly than it can now. Stories were rampant of customers who\u2019d stuck with their existing provider for years being charged, in some cases, hundreds of pounds more than they would have if they\u2019d taken out a policy as a new customer. It was intended as a competitive practice by insurers to lure more proactive drivers away from their existing provider. But this came at the cost of those who lacked time, ability or inclination to shop around. It doesn\u2019t seem quite fair, does it?<\/p>
Fortunately, after a market study, the UK\u2019s financial regulator \u2013 the FCA \u2013 agreed. From January 2022 it banned the practice of making renewal quotes<\/a> for motor insurance consumers more expensive than they would be for new customers. The same rules apply to home insurance. This means that you shouldn\u2019t pay any more if your insurance auto-renews than you would do if you took out the exact same policy as a new customer.<\/p>Buyer (or rather auto-renewer) beware though. Your existing insurer may not be allowed to charge any more than they would if you were a new customer. But this doesn\u2019t mean your insurance premiums won\u2019t rise. Or, even if they don\u2019t, that you won\u2019t now be able to get equivalent cover even cheaper from another provider. The insurance loyalty penalty might have been done away with. But it\u2019s still well worth shopping around every year to find the best car insurance deal<\/a>.<\/p><\/div><\/div><\/div><\/article>The cost of loyalty \u2013 are loyal customers still paying more?<\/h3>
The Association of British Insurers (ABI) publishes a regular tracker looking at how the cost of insurance is changing. In its report from the second quarter of 2022<\/a>, it revealed that costs for both new policies and renewals had increased a little on the previous quarter.<\/p>Quarter on quarter, average renewal premiums had risen just 0.5% (to \u00a3371), while average premiums for new policies rose by 3% (to \u00a3500). There will be some nuances behind this, of course. The new policy figures will include those taking out insurance for the very first time, with no track record and no claims history. And such customers tend to be more expensive to insurer in general. By definition, those renewing their car insurance will almost certainly have at least a year\u2019s worth of driving history, so are more of a known entity.<\/p>
But, while it\u2019s early days, these findings paint a promising early picture of the effect of the ban on loyalty premium hikes.<\/p>
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If you\u2019d asked us this a few years ago, the answer would have been a disappointing yes. Until 2021, it was a sad reality in the insurance industry that not only did loyalty not pay, but it could actually have cost you even more dearly than it can now. Stories were rampant of customers who\u2019d stuck with their existing provider for years being charged, in some cases, hundreds of pounds more than they would have if they\u2019d taken out a policy as a new customer. It was intended as a competitive practice by insurers to lure more proactive drivers away from their existing provider. But this came at the cost of those who lacked time, ability or inclination to shop around. It doesn\u2019t seem quite fair, does it?<\/p>
Fortunately, after a market study, the UK\u2019s financial regulator \u2013 the FCA \u2013 agreed. From January 2022 it banned the practice of making renewal quotes<\/a> for motor insurance consumers more expensive than they would be for new customers. The same rules apply to home insurance. This means that you shouldn\u2019t pay any more if your insurance auto-renews than you would do if you took out the exact same policy as a new customer.<\/p> Buyer (or rather auto-renewer) beware though. Your existing insurer may not be allowed to charge any more than they would if you were a new customer. But this doesn\u2019t mean your insurance premiums won\u2019t rise. Or, even if they don\u2019t, that you won\u2019t now be able to get equivalent cover even cheaper from another provider. The insurance loyalty penalty might have been done away with. But it\u2019s still well worth shopping around every year to find the best car insurance deal<\/a>.<\/p><\/div><\/div><\/div><\/article> The Association of British Insurers (ABI) publishes a regular tracker looking at how the cost of insurance is changing. In its report from the second quarter of 2022<\/a>, it revealed that costs for both new policies and renewals had increased a little on the previous quarter.<\/p> Quarter on quarter, average renewal premiums had risen just 0.5% (to \u00a3371), while average premiums for new policies rose by 3% (to \u00a3500). There will be some nuances behind this, of course. The new policy figures will include those taking out insurance for the very first time, with no track record and no claims history. And such customers tend to be more expensive to insurer in general. By definition, those renewing their car insurance will almost certainly have at least a year\u2019s worth of driving history, so are more of a known entity.<\/p> But, while it\u2019s early days, these findings paint a promising early picture of the effect of the ban on loyalty premium hikes.<\/p>The cost of loyalty \u2013 are loyal customers still paying more?<\/h3>