According to new research, insurance customers in the UK are losing up to £1,000 a year by not 'shopping around'. The report also suggests that insurers charge loyal customers up to three times more than new customers, in order to offset the money they lose from giving cheaper deals to the new customers.
In other words, loyal long-term customers are quite literally paying more, just to subsidise the customers that have no loyalty!!!
An audit of 9,000 motorists and 8,000 home-owners carried out by Consumer Intelligence on behalf of the Daily Mail newspaper, found that premiums steadily increased with every year that customers remain with the same insurance company.
According to the research, customers who moved their home insurer saved £37 after a year, rising to £78 after five years and about £127 for those who switched after nine years or more. Some customers discovered they were being charged up to £1,000 more when compared to the cheapest deal on the market - even if their own insurer was the one offering the deal.
When it comes to car insurance, customers who switched their insurance saved an average of £63 after one year, rising to £81 after five years, and about £117 after nine years.
Ian Hughes of Consumer Intelligence said that the price rises were imposed to pay for cheaper deals to attract new customers. “Companies are so fixated on attracting new customers because it is seen as a sign of health that the focus is not on keeping existing ones.”
According to Rod Jones, from comparison website uSwitch.com: “The data shows that loyalty really doesn’t pay. The longer you’ve been with your insurer the more you are likely to save switching,”
“However, when shopping around don’t forget that price isn’t everything. Make sure you find a policy which provides you with the cover you actually need and is right for your personal circumstances. With motor insurance, don’t assume third party only cover will be cheaper than fully comprehensive as for many motorists this isn’t the case and you could save £100s by taking out a fully comprehensive insurance policy.”
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