Loyal motor insurance customers face premiums double those of new customers, which will impact two thirds of UK consumers. This comes despite The Financial Conduct Authority (FCA) reforms intended to ensure new customers are treated the same way as existing ones at renewal coming into force in January 2022.
GlobalData’s 2021 UK Insurance Consumer Survey found that 65.6% of UK consumers renewed with the same provider in 2021. This was made up of 41.6% who shopped around but ultimately renewed with the same insurer and 24.0% who renewed automatically without conducting any research. Guardian Money found that premiums for renewing customers were up to twice the price of new quotes in May 2022.
This news is not particularly surprising, as the motor market is highly competitive and attracting new business is extremely dependent on value. The prominence of price comparison sites – coupled with consumers being extremely likely to select a policy from the first page (i.e. cheapest) – means it is difficult for insurers to make profit on new business.
However, this will be disappointing for the FCA. Its reforms were intended to stop customers who renew from facing punishments for their loyalty. GlobalData findings show that 24.0% of people in the UK renew without even checking other options, so a sizable proportion of consumers are facing higher premiums than they should. It is advisable to at least check for other price options at renewal, especially given the cost-of-living crisis currently being experienced.