Insurance customers could make savings by haggling and switching, says Which?

Insurance customers should still be proactive by haggling and potentially switching when their policy comes up for renewal, as they could be paying more than necessary despite a “loyalty penalty” ban having been introduced at the start of this year, according to Which?

The Financial Conduct Authority (FCA) put the ban in place after finding that millions of home and motor insurance customers were losing out by renewing repeatedly with their existing providers.

In January, the FCA implemented new rules that banned car and home insurers from offering different prices to equivalent new and renewing customers.

In a survey of more than 14,000 Which? members, the consumer group found that just over half (51 per cent) of those with home insurance, and around four in 10 (43 per cent) with car insurance, were paying a higher premium this year than they did last year.

The average increase among those seeing a rise was £35 for car insurance customers and £41 for home insurance customers. Out of those customers paying more, half (50 per cent) were renewing with their current car or home insurer.

Which? also found that those who haggled with their current provider or switched could still make significant savings. When it came to haggling, a quarter (25 per cent) of those surveyed discussed their price with their insurer this year, and of those who did, around half (48 per cent) saw a reduction in their premium – averaging £56 for car insurance and £54 for home insurance.

Those who instead decided to switch insurers also made significant savings. Car insurance customers who switched insurer were found to be paying £43 less, on average, than those renewing. Home insurance switchers were paying £103 less.

The research also compared premiums paid by customers in the first six months of this year, after the ban came into force, with premiums paid between May and December 2021.

For car insurance policies bought before the end of December 2021, people paid £360 on average. For cover bought between January and June this year, after the ban came in, the average annual price was slightly less, at £343. Home insurance customers typically saw a fall from £332 to £329, over the same period.

But Which? said most indicators suggest that car insurance prices are now generally back on the rise. This is largely because of increasing claims costs to insurers, caused by factors including increased used car prices and higher costs and delays in obtaining parts and materials for repairs.

Which? also pointed out that the new loyalty penalty rules still allow insurers to offer customers different prices depending on the “channel” used – for example, whether they go directly to the insurer or use a comparison site.

Insurance quote prices also change from day to day, so it is always worth doing some research before approaching an existing provider or considering making a switch in order to save money, the consumer group added.

Jenny Ross, editor of Which? Money, said: “With household budgets under huge strain at the moment, it’s important not to renew your insurance without first checking if you could pay less. Our research shows it’s still the case that the price quoted by your insurer is not necessarily the best price you can get.

“Doing your research on comparison sites, haggling, and switching [provider] remain effective ways of bringing down the cost of home and car insurance.”



Source link

Leave a Reply

Your email address will not be published.