End of £4bn insurance loyalty rip-off: Families are expected to save a fortune over next decade when ban comes into place in the New Year
- From Jan 1, insurers will be barred from charging long-standing car and home insurance customers more than new policyholders
- Major victory for Money Mail, which has long campaigned for a fairer deal for loyal customers
- Experts warned move could have unintended consequence of pushing up premiums for those who regularly switch insurers for the best deal
The insurance loyalty rip-off will finally be banned in the New Year under rules expected to save households £4.2billion over the next decade.
From January 1, insurers will be barred from charging long-standing car and home insurance customers more than new policyholders.
It is a major victory for Money Mail, which has long campaigned for a fairer deal for loyal customers.
But experts warned the move could have the unintended consequence of pushing up premiums for those who regularly switch insurers for the best deal as the companies seek to protect their bottom line.
The insurance loyalty rip-off will finally be banned in the New Year under rules expected to save households £4.2billion over the next decade. From January 1, insurers will be barred from charging long-standing car and home insurance customers more than new policyholders
For years, millions of customers have overpaid after firms automatically ramped up their premiums at renewal – known as ‘price walking’.
The Financial Conduct Authority said six million loyal policyholders would have saved £1.2billion in 2018 if they had they paid the average price for their actual risk instead of being charged more.
Under its new rules, premiums could still rise if customers have made a claim or their circumstances have changed.
But insurers will no longer be allowed to reserve discounts for newcomers while charging existing customers more.
The elderly and vulnerable, who are less likely to be online or shop around, are expected to make the biggest savings. But the Financial Conduct Authority has warned that insurers could raise prices for all customers to cover their losses. (File image)
Instead, all people in the same risk bracket must be offered the same price.
Insurers must also make it easier for customers to opt out of auto-renewing their policies.
The financial regulator estimates the changes will save households £4.2billion over the next ten years.
The elderly and vulnerable, who are less likely to be online or shop around, are expected to make the biggest savings.
But the FCA has warned that insurers could raise prices for all customers to cover their losses.
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