Home Insurance News: Loyal customers have higher annual premiums
Loyal home insurance customers are finding themselves with higher monthly payments than new customers. A major study by ‘Which?’ concluded that customers which have existing contracts are paying around £80 more a year on their building and contents insurance policy.
Loyalty is usually rewarded with a sense of allegiance or discounts, however insurance customers have found themselves at a loss.
Insurance companies are continuously pursuing new business, and this means they’ll frequently lure new customers through the door with discounted premiums, and the loyal customers may find themselves carrying that burden, paying higher rates that support the ‘loss-leading’ new customer offers.
Loyal customers seeing a rise in prices
According to new research conducted by ‘Which?, the average premium paid yearly for customers which have been with the company for over 20 years, is almost double what a new customer will be paying.
5,592 out of the 8,000 survey participants told ‘Which?’ what they were paying and many of them were paying on average £200 more than the new customers, with the average premium being £396 a year for a policy which has existed for 20 or more years, in comparison with the £195 a year on average which is paid by new customers.
Members of the ‘Which?’ money board such as Harry Rose, the editor, released a statement that “It is unacceptable that longstanding policyholders are taken for granted by insurance providers and hit by these excessive premiums.” Going on to describe the exploitation that existing customers may face through being loyal, and continuing to pay the “vastly overpriced premiums”.
The elderly are finding themselves at a greater loss – with many over 75’s holding a contract for over 10 years, the majority are paying more than they need to – and more than other new customers do – without realising. Suggested to be due to the generational difference in involvement with online advertisement or comparison websites, which is the most commonly used information platform for insurance companies, the over 75’s are often taken advantage of.
Despite the price difference, the study did however show that insurance companies will accept cancellation of an old contract, if the intention is to take out another contract at a cheaper price – which would be the same price for new customers.
In an attempt to help raise awareness, some companies have begun to put prompts on their customers’ bills, reminding them of the best deals to avoid consumer exploitation.