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.
Insurers will no longer be allowed to charge long-standing customers for car or home insurance more than they do new policyholders starting January 1.
Money Mail is proud to have won this major win. Money Mail had long fought for better deals for loyal customers.
Experts warn that the change could lead to higher premiums for people who switch insurance companies for better deals.
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. Beginning January 1, insurance companies will not be allowed to charge homeowners with longstanding home or car insurance policies more than those who have just become 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.
Its new rules allow for premiums to increase if customers make a claim or change their circumstances.
Insurance companies will be unable to give discounts to customers who are new, but charge existing customers more.
The most savings are likely to come from the vulnerable and elderly who tend to spend less time online. However, the Financial Conduct Authority warns that insurance companies could increase prices to compensate for customers’ losses. (File image)
Instead, everyone in the same risk group must receive the same price
Customers must have the ability to cancel auto-renewal from their insurance companies.
The financial regulator estimates the changes will save households £4.2billion over the next ten years.
Expect the most savings from elderly and vulnerable people who tend to spend less online.
The FCA warns that all customers could see an increase in prices if they want to be compensated for their losses.