Home insurance customers who stay with the same provider for more than a year are paying significantly more than new customers, according to consumer group Which?.
The survey of close to 8,000 policyholders reveals those with combined insurance policies (buildings and contents) held for more than a year were paying on average 38% more than new customers.
For contents insurance alone, existing customers were paying around a third (32%) more annually than new customers.
Policyholders who have been with the same insurer for over 20 years are penalised the most, paying close to double what new customers are paying.
Which? found the average premium for a combined insurance policy held for 20 years or more was £396 a year. For new customers, the premium was only £195.
Harry Rose, editor for Which? Money, comments: “Customers who prefer to stay with one provider are at risk of being exploited by these vastly overpriced premiums when little has changed in the service they receive.
“Insurers must make sure existing customers remain a priority, and are not sidelined by the push to attract new business.”
In May the Association of British Insurers (ABI) and the British Insurance Brokers’ Association (BIBA) launched a set of principles. It hoped this would address the difference in charges between loyal and new customers, as well as stopping long-standing customers from being unfairly penalised.
An ABI spokesperson tells Moneywise: “We recognise that the insurance market is not working as well as it should for many long-standing customers. We want everyone to get the best deal in a competitive market, which is why we have launched an industry initiative to help those customers who do not shop around.”
Over two thirds (69%) of respondents to the Which? survey had been with their home insurer for longer than a year, which supports the need for consumers to shop around for better rates.
Average premiums paid for home insurance policies
|New policy (under a year old)||£100||£195|
|Over 1 year and up to 2 years||£120||£220|
|Over 2 years and up to 4 years||£108||£250|
|Over 4 years and up to 6 years||£144||£300|
|Over 6 years and up to 8 years||£144||£324|
|Over 8 years and up to 10 years||£150||£329|
|Over 10 years and up to 15 years||£156||£360|
|Over 15 years and up to 20 years||£155||£360|
|More than twenty years||£200||£396|
Source: Which?, August 2018