Insurers reward loyalty with higher bills

Older customers pay the penalty

LOYAL HOME insurance customers can find themselves paying a £75-per-year loyalty penalty for sticking with the same provider, Which? has found.

The consumer group found customers with combined buildings and contents policies owned for longer than a year were paying, on average, £75 more annually than new customers.

On average, existing customers were paying £270 per year for a combined policy, while new customers were paying £195, it found.

The loyalty penalty was also found to balloon over time.

Customers who had been with the same insurer for over 20 years paid around double the amount of what new customers paid.

For combined insurance, the average premium paid for a policy 20 or more years old was £396 per year, compared with the £195-per-year average for new customers. Seven in 10 of those surveyed had been with their insurer for longer than a year.

Which? heard from one customer who was paying £554 a year for her home insurance after six years with her provider.

Which? said that, surprisingly, many insurers do allow customers to cancel their existing policy to take out a new one at a cheaper price.

Harry Rose, Which? money editor, said: “It is unacceptable that longstanding policyholders are taken for granted by insurance providers and hit by these excessive premiums.”

A spokesman for the Association of British Insurers (ABI) said: “We recognise that the insurance market is not working as well as it should for many longstanding customers.”

THERE WAS a time when loyalty was a priceless virtue in this country as shops, and businesses, went out of their way to provide the type of customer service that deserved to be rewarded with the long-term support of customers.

A relationship built on trust, it’s now been eroded by insurance companies, the ‘big six’ energy suppliers and others who have chosen to abuse this long-held goodwill by penalising those people, more mature in age and outlook, who simply expect to be treated fairly.

This ‘rip-off Britain’ culture is highlighted by the latest report by the consumer team at Which? magazine. It reveals that loyal home insurance customers can find themselves paying a £75-per-year penalty for sticking with the same provider while new clients receive preferential offers. Why should customers have to go through the rigmarole of cancelling their existing policy in order to take out a new one at a cheaper price? End this insurance scam now.