Insurers pledge to end rip-off premiums

INSURANCE companies have vowed to stop ripping off loyal customers by increasing their premiums each year.

In a stunning admission, the industry yesterday acknowledged that firms have been ‘unfairly penalising longstanding customers’ for years by charging them more than new customers.

The Association of British Insurers and the British Insurance Brokers’ Association pledged to stop the scandal.

The organisations said their members have made commitments including tackling ‘excessive differences between new customer premiums and subsequent renewal premiums that unfairly penalise longstanding customers’.

Firms will have to clearly inform customers that their premium only applies for a year and may rise, and will have to review their approach to pricing for customers who have been with them for more than five years to ensure they get a ‘fair outcome’.

The ABI and Biba will also have to publish a report within two years to show how firms have tackled the problem.

Campaigner Baroness Altmann welcomed the news adding: ‘But the devil will be in the detail and we’ll see what happens in practice. The worry is that overall insurance costs will still go up.’

Following a Daily Mail campaign, tougher rules were introduced by the City watchdog forcing insurers to disclose last year’s premium on renewal letters. Money Mail has also found that staying loyal to an insurer can cost families up to £1,000 a year when home, travel and pet insurance is included.